State's budget crisis explained
C.B. Forgotston - Nov 29, 2012
As the state of Louisiana faces its next annual revenue shortfall (a.k.a. the "fiscal cliff"), apparently, it is necessary to explain the obvious to our politicians.
Spending one-time money on recurring expenses is not the cause of the shortfall, itís just a symptom. The problem is simply that state revenues, while growing, arenít growing fast enough to sustain the current level of spending by the state.
There are only possible two solutions to the chronic shortfalls: No. 1, increase the revenues going to the state by raising taxes, tuition (taxes by another name) and fees. Or No. 2. reduce the level of state spending.
These are the same issues those of us in the private sector face daily ó raise prices or reduce expenses. Most of us in the private sector choose to reduce our costs. The most successful businesses reduce costs even when the economy is doing well.
In the case of the state, increasing revenues will only serve to slow our economy and reduce future revenues to the state. However, state spending can be reduced by simply letting local governments, non-profits and non-governmental agencies fund themselves.
As we have seen by the giant stimulus packages at the Federal level government spending does not grow the economy or at least not at a rate fast enough to justify the increased spending. They only delay the inevitable.
If the economy is allowed to grow, naturally, then revenues to state government increase and spending can be increased in the future.
The politicians in Louisiana must decide whether to maintain the rate of state spending or reduce the spending to allow our economy to grow. That decision requires vision beyond the next election.
If Iíve missed anything please let me know.
Jindal remains consistent
Gov. Bobby Jindal is roaming America "Monday morning quarterbacking" Mitt Romney and the Republican Party.
Bobby tells the GOP to be "the party of ideas, details and intelligent solutionsÖ." and to "stop reducing everything to mindless slogans, tag linesÖ." Politico, November 13, 2012.
He goes on: "The reality is we have to be a party of solutions and not just bumper-sticker slogans but real detailed policy solutions."
Letís put Jindalís rhetoric to the test. Bobbyís latest bumper-sticker slogan is "tax reform."
Jindalís lackeys, Tim Barfield and the ethically-challenged Stephen Moret, are visiting with the stateís newspaper editorial boards handing out "bumper-stickers."
At a recent visit to the editorial board of the Lake Charles American Press, Moret explained the goals of the plan are: "a simplified tax structure for individuals and businesses; a more attractive image for business investment and jobs creation; improved rankings for business climate; and less revenue volatility." American Press, November 18, 2012.
Whereís the "real detailed policy solutions"?
Even more interesting is that since the "tax reform," we are told, will be "revenue neutral" there is no talk of spending reform to eliminate the use of one-time revenues for recurring expenses which result in annual "fiscal cliffs."
The Jindal lackeys say that the legislation to implement the amorphous "tax reform" will be presented to the lege in time for the 2013 Regular Session.
Just as it was with Jindalís "pension reform," that could mean that only after the session begins would the public get its first glimpse of the details of "tax reform."
While Jindal challenges the Republicans to change their ways, his method of legislating by treating the leges and their constituents like mushrooms (keeping them in the dark and covering them with manure) remains exactly the same in Louisiana.
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