Fiscal problems deepen
As soon as the FY13 state budget was enacted in June, the state was looking at making at least $600 million in mid-year budget cuts in December.
The upcoming cuts are because Team Jindal intentionally overestimated revenues, estimated savings that will never happen and used one time revenues that will never materialize to balance the budget.
Compounding the problem
On Friday, Team Jindal announced further cuts to the Medicaid (healthcare for poor, elderly and young) budget by $679 million as a result of an unexpected reduction of $859 million in Federal funds.
That still leaves a balance of $180 Million which will have to be cut from the Medicaid budget.
[Commissioner of Administration Paul] Rainwater said he’s waiting until the Revenue Estimating Conference meets to make a decision on how to handle the remaining funds. (Monroe News-Star, July 14, 2012.)
And from a Jindal floor leader:
Sen. Mike Walsworth, R-West Monroe, said he’s not holding his breath to see if more revenues come in because "that hasn’t happened in the last three years."
Rainwater must be getting his economic forecasts from the ethically-challenged head of economic development Stephen Moret’s press releases.
There’s not a credible economist in this state who predicts significant improvement in the state’s economy by the next REC meeting; likely in December.
At the last REC meeting the economist from the Lege Fiscal Office and Rainwater’s own economist predicted a further decline in revenues this year due to a dismal economic outlook.
It’s more than a bit ironic that Bobby Jindal is touring the country telling everyone how bad is the economy. He certainly isn’t predicting it to improve by December.
Growing the problem
This failure to face reality by the "conservative" Jindal Administration means instead of having a mid-year budget cut of $600 million, the cut will have to be at least $780 million.
Because the fiscal year will be half over, the effect of the mid-year budget cuts on the state agencies will be the equivalent of $1.5 billion on an annual basis.
Rainwater made a political decision rather than a financial one and one that is in the best interest of the people of Louisiana.
Who will fix it?
As Albert Einstein said: "Significant problems we face cannot be solved at the same level of thinking we were at when we created them."
Come December, don’t expect Rainwater or Jindal to fix the fiscal problems they created. They won’t be a bit smarter then than they are now.
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