Finance expert explains budget concerns for La.

Anticipating Tuesday’s general membership meeting for the Houma-Terrebonne Chamber of Commerce, Bob Keaton, special assistant to LSU President John Lombardi, said he intended to let business leaders know that educating the public and legislators alike is the first step to solving Louisiana’s budget woes.

“There is a tendency on the part of a lot of folks to minimize the implications,” Keaton said during a telephone interview from his home in Baton Rouge.

Keaton described his presentation, which he has delivered to various forums, as a discussion he makes available to anyone who will listen. It is constructed in three parts.

First, he said, it is important to properly identify the problem in detail and look into the numbers involved. Then investigate how those numbers became the result of a budgetary design. Basically, he confirmed, the problem in its simplest form, is a matter of the state offering more services than it can afford.

Second, Keaton explained that the significance of the problem must be kept within context of state revenue and expenses, and pointed out the relationship of a projected $1.6 billion shortfall compared to a $25.5 billion budget. He said the 6 percent cut this shortfall would represent is more complex than it appears on the surface.

The third part of Keaton’s presentation deals with explaining what alternatives are available to the governor and the legislature to address the budgetary shortfall, but noted that there are complications in using any number of options given the constraints of the state constitution and the politics of dedicated funds.

“The design of the presentation is to explain the $1.6 billion shortfall projection in the context of the state budget,” Keaton said. “Obviously if you take increasing revenue off of the table and can only deal with the budget within the context of the budget itself then you have to decide what you can cut, and how much you can cut without putting a strain on certain critical services, like higher education and health care, and how you can bring other programs that have traditionally not been cut into the calculation of the cut.”

“Some [budget items] are dedicated by statutory provisions. Some are dedicated by constitutional provisions. Then [you have to look] at what else is out there in the way of an option to generate some kind of spreading of the cut further,” Keaton said.

Keaton noted that legal and practical implications always come into play when looking at what will be eliminated from a budget. “You’ve got to be able to look at the thing across the board and explore all of the options together and not just isolate on one or two. Because one or two won’t solve the problem,” he said.

The bottom line for this public finance expert is that government needs to decide what services it wants to provide and then raise revenue to provide those services. Keaton said that the Louisiana legislature and governor must agree on what state government will support and how to cover the costs accordingly.