Friday, October 10, 2014

Friday, October 10, 2014

State finishes fiscal 2014 with a surplus; Lack of transparency contributed to OGB mess; The rent is too (darn) high; Feds give state $41 million for highway construction; and Joseph Rallo selected as new higher education commissioner

State finishes fiscal 2014 with a surplus

Louisianans received a bit of good news late Thursday, when Commissioner of Administration Kristy Nichols announced that the state had $178.5 million left over after paying all its bills for the budget year that ended June 30. Although the state Constitution limits how surplus dollars can be used — such as repaying debt, funding construction budgets or paying for one-time expenses — legislators have traditionally found ways around those restrictions. That’s likely to be the case again next year, when lawmakers face a $1.2 billion financing shortfall.

Fortunately for legislators, the 2015 Legislature is a “fiscal” session, where lawmakers have the opportunity to address the state’s structural deficit by raising new revenues rather than relying on the cuts-only approach that has produced damaging cuts to critical state services in recent years.

 

Lack of transparency contributed to OGB mess

The financial hemorrhaging in the state employee health plan, which is running large monthly deficits that will soon force state workers, retirees and their families to pay more for their health care, might have been avoided with more front-end oversight. At least that’s what The Advocate’s Marsha Shuler reports, noting that an Office of Group Benefits advisory board failed to meet  for 18 months as key decisions were being made because the governor’s office didn’t fill vacancies.

Legislators just recently picked up on the magnitude of what’s happened and questioning how the administration made its decisions. They didn’t question when Group Benefits decreased premiums and freed up budget dollars, never questioning the decision or its wisdom. “You have to have someone watching,” said former state Rep. V.J. Bella, who headed a Group Benefits legislative task force years ago.

 

The rent is too (darn) high
While the cost of living continues to escalate in New Orleans, Baton Rouge and other urban areas, rural East Carroll Parish has the highest rate of families struggling to pay for rent. As The Advocate reports:

Households are considered “rent stressed” if they are spending 35 percent or more of their monthly income on rent. Almost 80 percent of the households in East Carroll with annual incomes of between $10,000 to $20,000 are rent stressed. In contrast, 39 percent of the households in Louisiana with incomes between $10,000 and $20,000 are rent stressed. “If you would list the 10 worst areas for rent stress, probably seven of them would be in the (Mississippi River) Delta,” said [LSU professor Roy] Heidelberg, an assistant professor in the Public Administration Institute at LSU.

Nearly 45 percent of Louisiana renters are rent stressed, compared to 43 percent nationally. According to a housing assessment study from LSU economist Jim Richardson, the share of Louisiana renters who are “rent stressed” increased 50 percent since 2000. Only 22 percent of Louisiana homeowners with mortgages, by comparison, spend that share of their income on housing each month.

 

Feds give state $41 million for highway construction

After spending all of its federal road and bridge dollars during the fiscal year ending on Sept. 30, Louisiana will receive an additional $41.4 million in federal aid for road and bridge repair. That’s welcome news for many Louisianans, who are worried that the state won’t find enough money to fill a $12 billion infrastructure backlog. Roughly 62 percent of the state’s roads are in poor condition, and Louisiana ranks 44th in its rate of highway fatalities. Drivers in The Pelican State pay the nation’s highest annual auto insurance rates at $1,277, and industry leaders fear Louisiana’s poor infrastructure could hamper an anticipated industrial boom. A special state panel searching for ways to improve Louisiana’s crumbling infrastructure is expected to propose at least $70 million for short-term fixes rather than sweeping enhancements.

 

Joseph Rallo selected as new higher education commissioner

The vice chancellor of the Texas Tech University system will succeed Jim Purcell as Louisiana’s higher education commissioner. The Board of Regents selected Joseph Rallo to serve as the new commissioner, a position that requires him to work with the state Legislature and the governor on public policy issues affecting higher education institutions across the state. Prior to being selected as Louisiana’s next higher education commissioner, Rallo’s was responsible for overseeing 45,000 students and a $1.7 billion budget at Texas Tech University. He is expected to start his new position in Louisiana in January.

 

Number of the Day

$178.5 million – Budget surplus left over from 2013-14 fiscal year. (Source: AP)