Kennedy blasts high cost of Louisiana living

Leo Pahlke
October 8, 2007
October 10
October 10, 2007
Leo Pahlke
October 8, 2007
October 10
October 10, 2007

Louisiana State Treasurer John Neely Kennedy said the state government has the fifth- or sixth-highest spending per capita in the United States.


“They (the state legislature) came. They saw. They spent,” he said. “We didn’t save a penny.”

Kennedy’s remarks came during a speech at the Thibodaux Chamber of Commerce Quarterly Luncheon on Thursday.


He said the state had a budget of $31.7 billion this past session and the budget has more than doubled from the time when it was $11.7 billion under former Gov. Mike Foster.


Kennedy explained the massive increase in budget can partially be attributed to the influx of funds from hurricanes Katrina and Rita, but he said every form of tax in the state is up dramatically, too.

The state treasurer referenced a series of studies out of the University of Texas that look at the economic impact of major storms on states.


As billions of dollars flood into the affected state, taxes invariably rise. But, the economic boost to the state’s budget is temporary, lasting only five to ten years, according to the study.


“It’s fool’s gold,” Kennedy said.

In 10 years, the income generated through the states taxes could very well plummet.


“We used to be the ‘low tax state.’ We were 43rd in the country. We’re 17 now,” said Kennedy.


He added Mississippi and Texas are ranked 29 and 43, respectively.

Part of the problem with spending $31.7 billion is the fact the state bonds out of the funds to get the money sooner rather than later.


Kennedy said the state borrows money for its capital outlay spending and a lot of the budget goes toward paying the principal and interest on the state’s debt.


“This debt has to be paid back,” Kennedy said. “You know who does this? You do.”

Some $5 billion of the net state tax goes toward support the state’s debt. That roughly translates into $1,400 per capita.


Also feeding the budget is spending on education, which costs the state $7 billion.


“Higher education is not Louisiana’s problem.” Kennedy said. “We have the best system in the entire world.”

The problem for Kennedy is at the lower levels.


The state spends $6,000 per public school student at the kindergarten and secondary education levels.


He was quick to point out the state has made some meaningful reforms. He pointed to the testing and accountability in the public school system.

“That which gets measured, gets done,” Kennedy said.


But, he’s frustrated with the progress the system has made, despite the funding it has been receiving.

He said of the 1,355 public schools in the state, 72 percent are failing. On average students are not scoring basic or better on the Louisiana Education Assessment Program test.

His main point being, it is not how much money is spent, but how the money is spent.

The other big piece of the state’s budget is its healthcare system.

The state spends $7.5 billion on healthcare. Ten years ago, it was spending $4 billion.

“If we were getting a good result, I don’t think we would mind,” Kennedy said.

He explained the state’s healthcare system is being run upside down. It is more focused on institutional medicine than preventive medicine.

The state ranks last in preventive care in the southern United States.

Kennedy said the state ranks 13th in the United States for the highest number of hospital beds, but it only ranks 36th for hospital-bed occupancy.

And he criticized the proposed new $4.5 billion charity hospital in New Orleans as being bigger than is needed.

The road and highway spending in the state also aroused Kennedy’s ire.

He said the state gets $1.2 billion for roads, but only $500 million goes to the Department of Transportation and Development, ports, airports and the state police, leaving only $700 million for actual asphalt and concrete.

“That is not enough,” Kennedy said.

He believes the problem could be corrected if revenue generated by the state’s tax on motor vehicles was directed toward roadwork at the parish level and not the general fund, which he described as being a “black hole.”

Gov. Kathleen Blanco nixed a bill designed to do this in the last legislative session.

Kennedy said the reasoning for killing the bill was because the state couldn’t afford it.

“If roads are a priority, don’t tell me you can’t find $275 million in a $31.7 billion budget,” he said.

Kennedy said he believes if this funding were dedicated, the state could bond out on it and generate $2.5 to $3 billion.

According to the state treasurer, the state is in a global market, already.

He said its competitors aren’t in Texas, Mississippi and Alabama, but are in India, Japan and China.

“We are in it (the global market),” Kennedy said.

Kennedy blasts high cost of Louisiana living