How Bobby Jindal Wrecked Louisiana
I keep telling my friends in the national media that if you think Bobby Jindal has a chance in hell of becoming president, send a reporter down to spend a few days in Louisiana, seeing what condition he’s leaving his state in. In today’s NYT, Campbell Robertson tells the country about the current mess. Excerpts:
“Since I’ve been in Louisiana I’ve never seen a budget cycle as desperate as this one,” said Robert Travis Scott, the president of the Public Affairs Research Council, a nonpartisan group based in Baton Rouge.
Louisiana’s budget shortfall is projected to reach $1.6 billion next year and to remain in that ballpark for a while. The downturn in oil prices has undoubtedly worsened the problem, forcing midyear cuts to the current budget. But economists, policy experts and lawmakers of both parties, pointing out that next year’s projected shortfall was well over a billion dollars even when oil prices were riding high, turn to a primary culprit: the fiscal policy pushed by the Jindal administration and backed by the State Legislature.
“Is he responsible for the full $1.6 billion?” Mr. Scott asked. “I’d say no. But I’d say he’s responsible for the order of magnitude.”
In a state the size of Louisiana, the shortfall is huge. But it is all the more daunting considering that the governor has unequivocally ruled out any plans for new revenue, bone-deep cuts have already been made to health care and higher education, ad hoc revenue sources that could be found to fill the gap have been all but drained and that robust economic growth, which might cushion the blow, has yet to materialize.
Mr. Jindal’s first term began in 2008 with a heady surplus of around $1 billion, high oil prices and a stream of federal disaster recovery money. He threw his support behind the largest tax cut in the state’s history and, for a time, had reason to boast about an economy that outperformed the nation’s. But oil prices are fickle, and the recovery money dried up and the recession arrived, if late and in a milder strain than in other states. Since 2010, here as elsewhere, middling has been the new normal.
As the story goes on to say, Jindal cannot be held solely responsible; the state legislature, dominated by Republicans, has its hands dirty too. From the Baton Rouge Advocate:
The Jindal administration is talking about cutting up to $300 million from state support to colleges and universities — that calculates to about $1 billion in higher ed reductions since Gov. Bobby Jindal took office in 2008 — and hacking another $200 million or so from health care. State agencies are looking at 15 percent to 20 percent removed from their budgets, which could translate into furloughs and reduced services.
“It’s going to be bad,” said state Rep. Patricia Smith, D-Baton Rouge, a member of the House Appropriations Committee, which will grapple with the budget proposal that Jindal is required to submit next month. Legislators take the governor’s proposition, tweak it some, argue about it a lot, then in about six months, pass pretty much the same plan into a law, authorizing government to spend the money starting July 1.
Smith’s disappointed that Jindal won’t come off his position against raising taxes or eliminating tax credits to fill a budget deficit that could be $1.4 billion or $1.7 billion or even $2 billion, depending on who you talk to. “We’re going to end up placing fees and all kinds of things on ordinary citizens, just so” Jindal can say on the presidential campaign trail that he didn’t raise taxes, she said.
That legislator is a Democrat, but Republicans say the same thing: that Jindal is sacking his own state to preserve his viability as a Republican presidential candidate — specifically, so he can say that he never raised taxes, but rather cut them. Even Quin Hillyer, the conservative columnist for the Advocate, thinks the state’s tax policy, under which the poor pay a greater percentage of their income in taxes than the rich, is a “moral abomination.”
Here’s what Jindal’s office says about his record as a tax-cutter and budget-slasher:
Since taking office, Governor Bobby Jindal has cut taxes a total of six times, which included the largest income tax cut in the state’s history – giving back $1.1 billion over five years to the hard working tax payers across the state, along with accelerating the elimination of the tax on business investment, making Louisiana no longer one of only three states in the country that taxes manufacturing machinery.
Governor Jindal continues to instill fiscal discipline and responsible use of taxpayer money. As the Governor has said, “Pork-barrel spending does not have a place in our budget, and I will veto any projects that do not meet specific criteria.” Following the first regular session, Governor Jindal kept to his commitment and vetoed $16 million in non-governmental and governmental projects. Moreover, when the state faced a $341 million budget shortfall, Governor Jindal chose to make state government more lean by finding strategic costs savings in the budget, rather than making across the board cuts or passing the bill on to taxpayers.
“Finding strategic costs savings in the budget” has meant the administration shuffling monies around to cover serious structural problems in the state budget — and the shell game can’t go on.
Let’s go back to 2008, when the new governor signed off on a huge tax cut backed by legislative Republicans — a tax cut he initially opposed. From the Times-Picayune’s report back then:
Facing growing momentum for some sort of tax cut, Gov. Bobby Jindal and legislative leaders agreed Wednesday to roll back the 2002 Stelly plan income tax increases starting in 2009.
The deal emerged after several days of backroom negotiations and appears to defuse a politically tenuous situation for Jindal, who did not initially embrace a tax cut even though the state treasury is brimming with record revenue.
The tax cut came in the form of repealing the so-called Stelly Plan. The cut was a giveaway to the rich, and Jindal, a reform Republican, was against it. But it was popular with the GOP legislature, so he embraced it — and it blew a massive hole in the state budget:
The 2002 constitutional amendment, which was named for its author, former Rep. Vic Stelly, R-Lake Charles, eliminated the state’s “temporary” sales tax on food and residential utilities in exchange for an increase in income tax rates for all but the lowest income earners.
Since voters approved the swap in 2002, repealing the income-tax increase has become a cause celebre on conservative talk radio and a staple of many political campaigns. But Jindal had pointedly avoided calling for a repeal, instead focusing his tax-cutting energy on business taxes that are unique to Louisiana.
Now Jindal brags about that massive tax cut. What he won’t tell you about is his refusal to cut corporate welfare, which costs that state treasury a fortune every year, according to a shocking comprehensive report by The Advocate. Excerpt:
“Duck Dynasty” is the most popular show in the history of A&E. Wal-Mart is the world’s largest retailer. Valero is America’s biggest independent refiner, earning $6 billion in profits last year.
But despite all that success, they’re all receiving generous subsidies from the taxpayers of Louisiana, through programs that funnel more than a billion dollars every year to coveted industries.
Every time the Robertson clan films another episode of “Duck Dynasty,” Louisiana is on the hook for nearly $330,000, at last count.
During the past three years, state taxpayers agreed to fork over nearly $700,000 to Wal-Mart to build new stores in two affluent suburbs.
And when Valero announced an expansion of its Norco operations, creating 43 new jobs, Louisiana promised to cover $10 million of the cost, or nearly a quarter of a million dollars per job.
Louisiana’s giveaways to businesses, aimed at boosting economic development in what historically has been one of America’s poorest states, have been growing at a much faster rate than the state’s economy.
During Kathleen Blanco’s four years as governor, the value of some of Louisiana’s largest tax breaks doubled. Since Bobby Jindal took the reins in 2008, the cost has more than doubled again, an analysis by The Advocate found.
When Blanco took office, the state gave away a little over $200 million in taxpayer money through the six major programs the newspaper examined. That number is now almost $1.1 billion annually, and it’s been growing by an average of 17 percent a year over the past decade.
Perhaps not coincidentally, the governor and the Legislature have found it increasingly difficult to balance Louisiana’s books. In five of the past six years, they’ve had to tap “one-time revenue” such as property sales, tax amnesties and other gimmicks to pull it off — a practice deplored by independent government watchdogs as well as many legislators on both sides of the aisle.
In his first year in office, the only year he did not have to resort to such tactics, Jindal himself deplored such bookkeeping, comparing it to “using your credit card to pay your mortgage.”
Since then, the governor and the Legislature also have raided various accounts set aside for specific purposes. And they’ve had to make painful cuts, particularly in areas like higher education, itself a key economic development tool.
Over the past six years, the cost of the six major programs examined by The Advocate ballooned by $650 million; meanwhile, state funding for colleges and universities was cut by almost the same amount, a decrease of 53 percent. The difference has been made up largely by tuition hikes paid by students.
The governor and the GOP state legislature really have balanced the budget on the back of higher education. Under Jindal’s leadership, the state has cut its spending on higher education to the bone. Now they’re sucking marrow. This just in from LSU:
LSU is facing a state budget cut of more than 40 percent to its operating budget, a move that could result in turning students away, reducing staff and shutting down entire programs at the Baton Rouge flagship campus.
“The potential that could hit us would be tuition fee increases, 3,000 less course offerings, hiring freeze on all new faculty, which would put a freeze on 125 of our faculty (searches),” LSU President F. King Alexander said.
The state is facing a projected $1.6 billion budget shortfall next year, and higher education institutions have been told to prepare for $300 million to $400 million in reduced funding in the coming academic year.
If that happens, LSU could be on the hook for more than $60 million, roughly 40 percent of the university’s operating budget.
“You can just take 40 percent out of everything we do, ” Alexander said. “If we were flushed with money, we could probably handle it better.”
LSU receives $107 million in funding from the state, and if the proposed budget from Gov. Bobby Jindal were to go through, LSU would get $55 million, a drop of 51.4 percent.
This is on top of a cumulative 46 percent cut to higher ed over the Jindal years. If this cut goes through, LSU (and other state universities) will be getting only 25 percent of the state funding it received when Jindal took office. Think about that. It’s a disaster. Gov. Jindal and the GOP legislature have been a catastrophe for higher ed in this state.
To be fair, they are constrained by constitutional and voter-approved restrictions that either dedicate money to particular programs or firewall others from the budget process. In the past, that has meant that lawmakers only have room to maneuver within the higher ed and health care budgets. Last year, voters protected Medicaid from further state cuts, which leaves higher ed as the only target left.
But Jindal has done a number on health care for the poor too. He has largely privatized the state’s public hospitals, and refused as a matter of principle to take the federal Medicaid money due the state because of Obamacare. So now he can tell GOP primary voters nationwide that he stood up to Obamacare. Here’s a slice of life story about what that meant to my family recently.
One Saturday night in early December, my elderly father got really sick. My mom and I decided he had to get to the hospital (good thing we did, too; though he objected at first, he later said that if we hadn’t taken him, he might not have lasted the night). We called his primary care physician, who recommended taking him to the emergency room at the midtown campus of the Baton Rouge General. You want to avoid Our Lady of the Lake, a big hospital in south Baton Rouge, on a weekend, said the doc; since the state closed the charity hospital in Baton Rouge a couple of years ago, shifting all the charity care to the Lake, the ER is chaos on a Saturday night.
So we went to the ER at the midcity campus of the General, and got great care. Coming into the city from the north side, it was significantly closer to go to the General, too.
Well, guess what? The General’s midcity ER is closing, it was announced this week. The hospital was losing $2 million each month treating the indigent, and could no longer sustain that kind of hemorrhaging. This was foreseen back in 2010, when Jindal and the GOP legislature chose to close Baton Rouge’s charity hospital:
Bill Holman, president and CEO of Baton Rouge General Medical Center, said the agreement won’t ensure that the patients who currently receive care at Earl K. Long will move to The Lake. He said an ambulance will take a patient to the closest hospital in an emergency, and when Earl K. Long closes, one of the closest hospitals will be Baton Rouge General’s mid-city campus.
Holman said his hospital couldn’t handle an influx of uninsured or Medicaid patients without the higher reimbursement rates that will be paid only to The Lake.
“We will have no choice but to close services or ration patient care to survive,” he warned.
Services are now closed. There is now no emergency room in north Baton Rouge, where the majority of the city’s poor, uninsured people live.
Again, it would be wrong to blame this entirely on Jindal. Our legislature has a lot to do with it. But the Louisiana legislature is not running for president. In Politico,Tyler Bridges sums up Jindal’s problems — and why, in my view, they are going to strangle his nascent presidential bid in the cradle.
Yet one topic thus far has garnered little national attention: His economic record in the Bayou State.
Democrats in the state are quick to point to the budget problems. But what’s striking are the harsh critiques from fellow Republicans, who say Jindal’s presidential ambitions and frequent campaign trips outside of Louisiana have taken precedence over managing his home state’s economic affairs. “I’m hoping he will multitask and spend some of his time with us,” said state Treasurer John Kennedy, a Republican. “I’m a numbers guy. We have serious, serious problems with our budget. For seven years, we have spent more than we’ve taken in.”
Republican state legislators are particularly scathing in saying Jindal no longer exercises leadership, but they don’t want to go on the record for fear of losing their choice committee assignments or having the governor kill their pet projects. (A governor in Louisiana has so much power that he appoints the speaker of the House and the president of the Senate, along with committee chairmen.) Jim Richardson, an economist at Louisiana State University who sits on a four-member board that determines the state’s available revenue, predicted that next year’s governor—regardless of party—will have to call a special session on the budget, as the first order of business, to clean up what Jindal has left behind.
And, you knew Grover Norquist was going to show up here:
In 2003, as a private citizen running for governor (he narrowly lost), Jindal promised to “oppose and veto all efforts to increase taxes.” This was part of the bargain he agreed to when he took the pledge—the shorthand description of the Tax Protection Pledge hawked by Americans for Tax Reform, the group headed by anti-tax zealot Grover Norquist. As governor, he has taken the “no tax” commitment to such lengths that in 2011 he vetoed legislation supported by dozens of Republicans that sought renewal of a 4-cent portion of the state’s 36-cent-per-pack cigarette tax, the country’s third lowest. “His only reason is that he’d taken the crazy position that if you renew a tax or suspend an exemption it was a tax increase,” said state Rep. Harold Ritchie, a Democrat and smoker who sponsored the measure. Lawmakers found a way to approve it without Jindal being able to exercise a veto.
In 2013, Jindal promised to whack a measure that would have raised $1 million for the hearing impaired through a fee on monthly cellphone bills. The amount: 2 cents per month. “I was totally shocked,” said state Rep. Patrick Williams, a Democrat who sponsored the measure.
Read the whole thing. A good question: to what extent was Jindal following the orthodox Republican playbook, governing not as a commonsense manager, but as an ideologue?
If Bobby Jindal’s presidential campaign goes anywhere, it will not be because of his record governing Louisiana, but in spite of it. He was first elected as a conservative, clean-government technocrat, and brought a lot of hope to many Louisianians. One of them wrote a Wall Street Journal op-ed column about it right after Jindal’s win. Excerpt:
[T]his election makes me proud and hopeful… . Yes, I’m fully aware that Louisiana is bound to break your heart. … [But] I think [Jindal’s] going to write the next great Louisiana story. Maybe just this once, it’s not going to be a farce.
That columnist was me, the fool.
UPDATE: Reader Ryan Booth, who was a lay leader in the Louisiana GOP, weighs in:
Bobby Jindal’s reversal on Common Core and blatant falsehoods on that topic make him an unlikely person for me to defend, but I would like to make a few points.
1) The problem at Baton Rouge General Hospital exists because 1 in 3 patients at the hospital is uninsured. The ER there has been getting 1300 uninsured patients per month.
I thought that Obamacare was supposed to fix this problem? Expansion in Medicaid would not make a significant dent. In Louisiana in 2012, the number of uninsured was much higher among those already eligible for Medicaid than it was for those who were not eligible but would have been under the expansion (over 213,000 to 77,000, if I am reading the numbers right). Expansion of Medicaid to higher income brackets would not significantly lower the state’s uninsured, but would involve a lot of people switching to Medicaid from private health insurance.
Additionally, expansion of Medicaid would put the state on the hook for another permanent budget item—further hurting our lack of budget flexibility. And the additional federal Medicaid money would save the state only a little money in the short term, before skyrocketing after 2017.
2) This article conflates the ending of the state charity hospital system with the state’s budget crisis. But the ending of the charity system saved the state over $52 million per year. The budget crisis and the cuts to higher education would be worse if not for ending the charity system.
3) The higher ed funding crisis does NOT exist because of a lack of willingness to spend on education. Louisiana actually ranks 18th in higher ed spending per capita. The problem exists because we have way too many four-year universities. In New Orleans, UNO and SUNO literally sit right next to each other. In the sparsely populated northeast part of the state, we have LA Tech, ULM and Grambling. This is, again, a structural problem that isn’t Bobby Jindal’s fault. What is needed is not cuts to LSU, but the bravery in the legislature to change a couple of lower-tier 4-year institutions into community colleges, killing duplicative programs that accomplish little and graduate almost no one.
Tuition at Louisiana’s public universities is also the 4th lowest in the nation, meaning that the cuts could probably be ameliorated by raising tuition, which is something that is almost guaranteed to happen.
Thanks, Ryan. Readers, he’s certainly right about the unsustainability of the state university system — a problem that was there before Jindal, and will remain long after he’s gone. The problem is that all the pols are standing together on this, because those universities are very important to their towns. But this can’t go on forever. The state needs something like the federal base-closing commissions, to give political cover to closing down institutions that ought not be kept open.