Population, spending out of balance

The state’s annual budget is too large and needs to be reduced to conform to the size of Louisiana’s population, said state Treasurer John Kennedy in Houma last week, speaking to the Houma-Terrebonne Chamber of Commerce.

State government has become dependent on federal dollars sent to Louisiana for relief from hurricanes Katrina and Rita, exacerbating the problem, Kennedy said.

The Legislature is taking steps this year to address the issue, trimming the budget by 9.8 percent from $30 billion to $27 billion. The state constitution mandates a balanced budget.

“To spend $30 billion, you have to have it,” Kennedy said, comparing Louisiana’s budget to those in South Carolina and Kentucky. Both states have similar populations to Louisiana but have $20 billion and $22 billion budgets, respectively.

Missouri contains more than a million more people than Louisiana and has a $21.4 billion budget.

Kennedy said Louisiana is in the top three states in spending growth and number nine in spending per capita, but that has not always been the situation.

In the 1990s under Gov. Mike Foster, the state budget was $11.9 billion. As recently as 2005, the budget was $20 billion.

“Louisianans pay more than their fair share,” Kennedy said.

The state is the 4th poorest in the nation.

Louisiana, which used to be a low-tax state, now ranks 8th in the amount of taxes the population pays per $1,000 earned, he said.

The bloated budget was predictable, in part because of the influx of billions of dollars from the 2005 hurricanes.

“(Former Gov. Kathleen) Blanco was convinced we’d entered a new era of prosperity,” Kennedy said.

Typically, following major hurricanes, tax revenue rises drastically because of the added funds.

“Studies say, though, that it never lasts. It’s fool’s gold,” he said. “Tax revenue eventually comes back to earth.” Kennedy showed a chart anticipating lower revenues for the state in 2010.

Louisiana traditionally has had an excess of state employees, also. The number currently is 104,000.

“I don’t remember when we didn’t lead the South,” Kennedy said.

As things stand, not much can be cut out of the state’s budget because it contains more than 400 dedicated funds. Kennedy insists, though, that those funds can be “undedicated.”

On the positive side, he pointed to the TOPS tuition program and the banking industry as the state’s strong points. Unemployment, though creeping upward, is still low compared to the rest of the country.

Kennedy offered a few remarks about spendthrift politicians.

“The issue is not how much we’re spending but how we’re spending it,” he said, taking digs at expenditures on non-government organizations, earmarks and other funding he feels is dubious.

“We’re asking schools and universities to sacrifice,” Kennedy said. “These (earmarks) are not priority expenditures.”

Kennedy is in his third term as treasurer.

The position’s responsibilities include investing state funds and managing debt obligations. The treasurer also chairs the State Bond Commission.

A Republican, he lost a run against U.S. Sen. Mary Landrieu for her seat last year.

State Treasurer John Kennedy spoke at the Houma-Terrebonne Chamber of Commerce meeting last Wednesday. Despite years of surplus due to federal hurricane recovery dollars, Kennedy insisted the cut to the state budget was predictable. * Photo by KEYON K. JEFF