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February 24, 2015
Louisiana State Treasurer John Kennedy criticized Gov. Bobby Jindal’s administration for spending more than the government takes in when he spoke to the Thibodaux Rotary Club last Tuesday.
Kennedy said mid-year budget cuts to higher education and health care can be avoided by eliminating 10 percent of consulting contracts and the funding of non-governmental organizations.
Gov. Jindal released his mid-year budget cuts earlier this month to address a deficit of more than $103 million. More than $60 million in funding will be cut from a number of state departments and another $42 million will be taken from one-time funds and various trust funds.
Gov. Jindal spared state funding for higher education, but has cut state funding of higher education in six out of the last seven years.
‘Smoke and Mirrors’
“For the last seven years every single budget we have had has been unbalanced,” Kennedy said.
According to the state treasurer, the budgets are balanced “on paper” but the in the end, it is evident the state has been deficit spending for six out of the last seven years, the proof of which is mid-year budget cuts.
Kennedy said that the budget is balanced through the use of “smoke and mirrors and accounting gimmicks.” He used an example of a vacant lot near the Capitol building that is for sale for $5 million and added to projected state revenues.
“For the last three years, we’ve sold that lot five times at $5 million apiece,” Kennedy said.. .Now nobody would pay $5 million for that lot, but every year they put it in the budget. We’re going to sell it and get $5 million, so let’s go spend that $5 million.”
Kennedy said through the last seven years Gov. Jindal’s administration has taken $800 million from the Medicaid Trust Fund, virtually draining the account.
“It’s gone,” he said.
The Jindal administration has taken money out of the Tobacco Settlement Trust Fund and funneled it into the general account, according to Kennedy. That money was intended to fund health care, higher education and TOPS.
Overspending on Consultants
But Kennedy blamed the bulk of deficit spending on outside consultant contracts and funding of NGOs.
According to the Division of Administration, there are 12,477 consultant contracts totaling in excess of $30 billion.
“We do not need all of them,” Kennedy said. He cited examples of wasteful consultant contracts such as one for over $140 million paid to four consultants to build a new website for the Department of Children & Family Services’ Supplemental Nutrition Assistance Program.
Kennedy said he doesn’t want to reduce anybody’s food stamps, but “folks on food stamps don’t need a website. Folks on food stamps need help getting a job,” and that money would have been better spent funding higher education.
Kennedy said if he were governor, he would reduce the total number of consultants by 10 percent and tell the survivors to accept 5 percent less pay across the board.
Overspending on Health Care
Kennedy also stressed that it costs five times more to treat people in hospital emergency rooms for non-emergencies than had the service been provided by a primary care physician.
“Every year, according to the Public Affairs Research Council, taxpayers pay for 900,000 visits for non-emergencies,” he said. “…If we could reduce those 900,000 visits just by 20 percent and dedicate that money to higher education we’d be so far ahead.”
Kennedy said the Department of Health and Hospitals is not doing anything to address the problem.
According to the treasurer, only 3 percent of Medicaid recipients spend 43 percent of the $8 million budgeted for Medicaid.
“I know what I would do…if [I] were running the Department of Health and Hospitals,” Kennedy said. “I would go find out who those 3 percent are.”
Legislative Support for Consultant Reform
Rep. Jerome “Dee” Richard (I-Thibodaux) authored a bill last year that would reduce consulting contracts by 10 percent and deposit the savings into a Higher Education Financing Fund.
House Bill 142 was unanimously passed by both sides of the Legislature but was vetoed by Gov. Jindal after the regular session had ended. The bill, which would have been effective on July 1, 2014, had it been ratified, will be up for a vote to override the veto during the start of the 2015 regular legislative session in April.
“Kennedy thinks that would save a half-billion dollars,” Richard said. “The second thing we’ve got to do is eliminate all NGOs. If you do those two things, you don’t need to add any revenue at all. That’s where the waste is at in government.”
Non-Govermental Organizations are non-profits funded directly by the state operating budget. Many do important work, such as the Council on Aging, Richard said, while others’ values are questionable. Many NGOs are now funded through consulting contracts, he noted.
Current Budget Cutsw
Gov. Jindal’s proposed budget cuts cite the fall of oil prices as the primary reason for a $103 million budget shortfall. The state projects to receive $203 million less in revenues in 2016, as well.
Jindal’s budget cuts to state departments include reductions in consulting contracts and services offered. The biggest proposed cuts are to the Department of Transportation and Development, which would realize a $16 million reduction, and the Department of Health and Hospitals, slated to be cut by $13 million.
State Treasurer John Kennedy told the Thibodaux Rotary Club last Tuesday he believes the state’s budget deficits are because of overspending and “accounting gimmicks.”
