Stop Deficit Spending

By John Kennedy, State Treasurer

By John Kennedy, State Treasurer

The evidence is overwhelming that Louisiana continues to spend more taxpayer money than it takes in.


We have had six years of mid-year budget cuts out of the last seven. We’ve raided the Office of Group Benefits, the Medicaid Trust Fund for the Elderly, the Artificial Reef Development Fund and Lord knows how many others. We’ve diverted money dedicated to health care, education and TOPS from the Tobacco Settlement Trust Fund into the state general fund. We finished last fiscal year with a $140 million deficit. One-third of the way through this fiscal year, we are already $172 million ($688 million annualized) over budget in the Medicaid program, our largest expenditure.


State government would do well to heed the advice of State Rep. Brett Geymann, leader of the House fiscal hawks: “There’s this constant juggling of all the numbers and using accounting tricks and gimmicks to try to find our way through another year, just to turn around and find ourselves in the same position next year.”


In other words, we should use good ole Louisiana common sense: When you’re in a hole, stop digging.


Here are nine steps state government should take immediately:


1. The Joint Legislative Committee on the Budget (JLCB) should immediately insist on reviewing every one of the 19,000 state consulting contracts with a goal of saving at least 10% in state funds.

2. After this review, the JLCB should require state agencies to renegotiate every one of the state’s remaining consulting contracts to require at least a 5% reduction in cost.

3. Terminate the contracts with the four out-of-state contractors who are spending $140 million in taxpayer money to construct a website for food stamps at the Department of Children and Family Services. Let’s spend the money helping people get jobs or new skills so they don’t need food stamps.

4. To cushion the blow of mid-year budget cuts and provide better service, all money, state and federal, being spent on after school tutoring and care for the disabled should be offered first to the schools of education and social work, respectively, at Louisiana’s universities and community colleges to perform the same services. Our schools certainly can’t do any worse of a job than some of the nongovernmental organizations spending this money now. For example, the Department of Health and Hospitals has given over $10 million to an NGO in New Orleans called Alternatives Living Inc., which promptly spent a big chunk of the money on Hornets tickets, meals at Commander’s Palace and Ruth’s Chris Steakhouse, and cruises.

5. Require DHH to 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.

6. Reduce the annual 900,000 taxpayer-funded emergency room visits for nonemergencies, such as pregnancy tests, diaper rash and acne, and use half of the savings to build community health clinics, where patients can be treated at a fraction of the cost of treating them in an emergency room.

7. 3% of Medicaid enrollees receive 43% of the Medicaid money. Manage their care better and stop the fraud.

8. Review all Medicaid hospitalizations for medical necessity. In 2009, 80% of the 218,784 Medicaid hospitalizations, costing $900 million, were not reviewed (Legislative Auditor). DHH says we are doing a better job. Trust, but verify.

9. Immediately implement a real expenditure freeze. The state expenditure freeze implemented by executive order on November 7 has 25 exceptions that make it meaningless.


Louisiana’s budget is a mess. Too many undeserving people at the top are getting bailouts and too many undeserving people at the bottom are getting handouts. No wonder taxpayers are feeling cheated. The good news is this can be fixed, but it won’t be fixed with happy talk.

Contact:
Michelle Millhollon
(225) 342-0012
mmillhollon@treasury.state.la.us