By State Treasurer John Kennedy

Louisiana is facing a $2 billion to $3 billion budget deficit next year. Here’s how we can deal with it:

1. Do not raise taxes or fees. We do not need to. It won’t work anyway. Ask California.
2. Louisiana has 258 state jobs per 10,000 people (federal Bureau of Labor Statistics). The national average is 143. Eliminate 5,000 positions each year for three years by not filling one-third of the state’s job vacancies each year. Annual savings: $500 million
3. Require a minimum span of control of one manager for ten state workers, like Texas and Iowa. 22% of Louisiana state government managers supervise one employee (Legislative Auditor). The average manager supervises four. Annual savings: see No. 2
4. Eliminate 10% (by value) of the state’s 16,000 consulting contracts. Annual savings: $750 million
5. Renegotiate the state’s remaining consulting contracts and require a 5% reduction in cost. Annual savings: $337.5 million
6. Use centralized collection, automated notices and tax refund
offsets to collect the $1.5 billion in accounts receivable owed the state, 58% of which is 180 days past due. Annual savings: $200 million
7. Implement Louisiana law (LRS 22:1065, LaHIPP) that allows the state to purchase private insurance for low-income citizens when it is cheaper than Medicaid. Annual savings: $100 million
8. Change state law and enforce federal law to reduce the annual 900,000 taxpayer-funded emergency room visits for nonemergencies by 25%. Annual savings: $67.5 million
9. Review all Medicaid hospitalizations for medical necessity. In 2009, 80% of the 218,784 Medicaid hospitalizations, costing $900 million, were not reviewed (Legislative Auditor). Annual savings: $180 million
10. Establish physician training agreements between our Charity Hospitals and Louisiana hospitals with a high Medicare patient mix to capture Medicare medical education funding. Annual savings: $160 million
11. Reform the state Medicaid Preferred Pharmaceutical Drug List to include the most effective drugs at the lowest price for each illness. Annual savings: $100 million
12. Reduce the $254 million in administrative costs for the state Medicaid Program by 10%. Annual savings: $25 million
13. Require state prisoners to pursue a GED as an incentive for probation or parole, like Florida and New York, to reduce our recidivism rate. Annual savings: $33 million
14. Give refundable state income tax credits (like the federal Earned Income Tax Credit) to parents of students in underperforming public schools to send the kids to better-performing parochial and private schools. Annual savings: $57.5 million
15. Establish a self-sustaining state revolving loan fund to finance local capital outlay projects at reduced borrowing costs. Annual savings: $75 million
16. Postpone the state’s current “LaGov ERP” computer upgrade until a cost-benefit analysis can be done. Savings: $50 million
Total savings: $2.636 billion

Sarah Mulhearn
(225) 342-0012