“Louisiana is facing a massive fiscal cliff, and we need solutions.” This sentence should sound familiar to all Louisianans. Year after year, our state faces yet fiscal crisis after fiscal crisis, leaving lawmakers and their constituents calling for permanent solutions to Louisiana’s budget woes. Today, the Pelican Institute answers that call with the release of the first in its series of deep-dive policy papers comprising A Jobs and Opportunity Agenda for Louisiana.
Among the primary budget challenges highlighted in the new paper is Louisiana’s abundance of non-reviewed government spending, nearly 90 percent of which is locked in silos and not available for discretionary use.
One major opportunity for reform is to end the arbitrary “silos” for government programs —re-examine those in the state Constitution and end those created through statutory dedications. Lawmakers should have the flexibility to manage the budget as a whole, not mere portions of it.
Another challenge the state faces is the underfunding and unreliability of the state’s rainy-day fund. As currently constructed, the state’s “rainy day” fund—officially termed the Budget Stabilization Fund— requires lawmakers to contribute a minimum of only $25 million per year—or less than .1% of the overall state budget—to offset revenue swings. The Pelican Institute supports policies to bolster transfers to the rainy-day fund —both by increasing annual transfers to the fund and the maximum level of revenues the fund can hold.
Louisiana should also address our state government’s overdependence on federal government revenue and its exponential spending growth in the years following Hurricane Katrina. Some of these solutions leading to greater fiscal responsibility include:
- Improve revenue forecasting in both the short and long-term to prevent the state from becoming subject to short-term revenue swings and encourage more responsible long-term planning.
- Re-set the state’s spending caps to prevent state government in Louisiana from growing without limit.
- Eliminate the continuation budget requirement to refute the notion that government must, or even should, grow larger and larger every year.
- Allow the Governor item-reduction veto authority to create a more favorable environment to reduce expenditure levels. By not forcing the Governor into a “take-it-or-leave-it” decision about whether to cut or retain an entire program’s spending, an item-reduction veto should lead to greater fiscal stability.
Stabilizing the state’s fiscal system is critical to bringing jobs and opportunity back to Louisiana, and these solutions mean we can accomplish this without having to constantly go back to Louisiana’s working families to pick up the bill. It’s time to reject a fundamentally broken status quo or blaze a new path for an approach to budgeting that will encourage more jobs and opportunity in Louisiana.
You can read the full deep dive and see all of the recommended solutions for Louisiana’s budget woes by clicking here. And, for a shorter summary of the problem and the solution, read our two-page outline.
Over the next several months, the Pelican Institute will release further deep dives into the major barriers to jobs and opportunity in Louisiana. Together, we can make fundamental change, and bring jobs and opportunity back to Louisiana.