Kennedy: Earmarks a big problem

State Treasurer John Kennedy was in Lafourche Parish last week driving home the topic that has most been on his mind: unnecessary spending by state government.

“State revenue is going down,” Kennedy told the Rotary Club of Lockport. “There’s a death struggle in Baton Rouge. Do we cut the budget or raise taxes?”

The last session of the state Legislature produced a $29 billion budget that went into effect on July 1. The amount is only 2 percent less than the previous state budget of $29.6 billion, Kennedy said, which legislators had to scramble to meet. Funding for healthcare was cut by 3 percent and money for education was reduced by 1.4 percent.

Kennedy said earmarks in the budget are one of the principal causes of wasteful state spending. He used state funding for two New Orleans area organizations, among others, as examples: the Bunny Friend Neighborhood Association and the Awesome Ladies of Distinction Mentoring Program.

“When we’ve got roads to repair, education needs, we spend it on earmarks?” he said.

Kennedy contended that around $30 million annually has been spent on earmarks over the past 20 years. That $600 million could have paid for the Morganza-to-the-Gulf hurricane levee protection system, he said.

“Lafourche and Terrebonne need it, but they spend money on the Bunny Friend Neighborhood Association and the Awesome Ladies of Distinction,” he said. “Shame on them.”

According to Kennedy, in the next two to four years, the state will be taking in $25 to $26 billion annually. As recently as 2005, the state had a budget of $19 billion. Missouri and Kentucky, with populations similar to Louisiana, have $21.4 billion and $22.3 billion annual budgets, respectively.

“We probably have the fastest increase in the budget in the union,” Kennedy said.

Following hurricanes Katrina and Rita, the state was deluged with federal disaster aid, private insurance money and private charity.

“Billions flowed into a relatively small economy,” he said. “Tax collections went through the roof-corporate taxes, franchise taxes. But it never lasts.”

Revenue peaked in 2008.

“Now it’s coming back down to earth,” he said. “We will have $2 billion less than we have today.”

The state constitution requires the budget to be balanced. To meet the budget, Kennedy said the state should not raise taxes.

“We avoided a recession. We’re better off than most states,” he said. “Louisiana has more than enough money to deliver services.”

He pointed to California, which has the highest state personal income tax and highest sales tax in the country-and the biggest deficit.

“Louisiana will have to live within its means,” Kennedy said.

The state could cut some of its 104,000 employees by taking advantage of turnover and combining work responsibilities, he said, saving between $600 million and $800 million a year.

Louisiana spends $4.6 billion annually on base salaries and hired 3,200 employees last year costing $278 million, according to Kennedy.

Alabama, with a population similar to Louisiana, has 89,000 state employees.

Louisiana could also do a more efficient job of collecting money owed to the state. Kennedy said $1.7 billion is owed to Louisiana.

Collecting 20 to 30 percent of that amount would pay for higher education, he said.

Striking a more positive note, Kennedy said oil and gas dominance of the state economy is good, though many in Congress dislike the industry. In addition, the state economy has become more flexible since the 1980s.

But Kennedy’s focus is on revenue and spending.

“There will be a huge move in Baton Rouge to raise taxes,” he said. “When you spend $29 billion, someone’s getting $29 billion.”

“Agencies say they need all the money (they receive), but they can do with less,” he said. “They have to cut the $29 billion or raise taxes. We can do the same job with fewer people.”