Monday, October 13, 2014

Monday, October 13, 2014

The surplus that’s really a deficit; Advocate: “No” on Amendments 1 and 2; Mitch Landrieu joins call for higher wage; American Press: Time to fix transportation backlog

The surplus that’s really a deficit
There was something odd about the Division of Administration calling a press conference late last Thursday to announce that state government finished the 2014 fiscal year with a $179 million surplus. Typically, in years past, this type of news was announced on a Friday morning before the Joint Legislative Committee on the Budget, where legislators have a chance to ask questions. It also seemed incompatible with what we knew about the state’s finances, as the fiscal year ended with revenues flat and the administration forced to take out short-term loans just to meet its financial obligations to colleges and universities.

Less than 24 hours later, we learned from The Advocate’s Marsha Shuler that the surplus is really a $141 million deficit, had the state used the same accounting rules that have been employed for years. The surplus is due to an accounting change initiated by the administration, which it apparently failed to clear with the nonpartisan watchdogs that actually get to decide such things.

Legislative Auditor Daryl Purpera said his office has not yet been provided with the data on how the administration came up with the surplus number. Purpera’s office reviews the administration’s findings for accuracy for the Legislature. Its reviews have led to changes in calculations both up and down on surpluses. “My understanding is that they have changed the formula, but we have not been able to go through all the details,” he said. Purpera said the administration, the auditor’s office, the fiscal office and treasurer agreed on the methodology for surplus calculation some time ago “to produce the most accurate amount of money that can be used in the future period.” The change must be evaluated in that light, he said.


Advocate: “No” on Amendments 1 and 2
Louisiana’s leading daily newspaper is urging its readers to reject a pair of constitutional amendments on November’s ballot that would lock up Medicaid funds for large institutional providers such as nursing homes and hospitals, making it more difficult to finance other state priorities. The Advocate says the amendments would “straitjacket” the Legislature as they grapple with funding shortfalls.

In both this case and a second amendment on a future hospital fund, there would be a way for future Legislatures to reduce the appropriations for the program beneficiaries, but it would require a two-thirds vote of lawmakers. Any cuts could not exceed the percentage of cuts from other programs. This is controversial in part because the fund benefits only certain types of health care; home-health providers and other programs would not be protected in the same way. Our concern is that further reducing budgetary flexibility would make managing the Medicaid program more difficult.


Mitch Landrieu joins call for higher wage
New Orleans Mayor Mitch Landrieu joined mayors from 70 other cities in calling on Congress to raise the federal minimum wage above the current $7.25 per hour. As reports:

The mayors want a vote on legislation to phase in the higher $10.10 an hour minimum wage, but action is unlikely when Congress returns to the Capitol the week of Nov. 11th for a lame-duck session following the mid-term elections. An increase would have a significant impact on Louisiana, where 34.76 percent of workers — the third highest percentage among the 50 states — earn 150 percent or less of the current $7.25 minimum wage, according to the Hamilton Project, an economic think tank. Those are the workers most likely to benefit from a higher minimum wage.


American Press: Time to fix transportation backlog
The debate over how to fix Louisiana’s chronic backlog of road and bridge repairs is especially acute in Lake Charles, which has a spate of new industrial construction underway and the traffic tie-ups that go with it. The inimitable Jim Beam of the American Press seems to side with former Transportation Secretary Kam Movassaghi and industry leaders who have called for better prioritization and more new construction, over current officials who claim credit for not letting things get worse under Gov. Bobby Jindal’s watch.

We have already seen increased traffic problems in the Lake Charles area that will become horrific when thousands of new workers arrive here to do construction work. It’s too late, unfortunately, for the state to widen streets like Country Club Road and improve traffic flow on other heavily traveled thoroughfares. Other parts of the state are facing similar problems because of a $12 billion highway backlog that has only increased over the 6½ years Jindal has been in office. One of the best examples is the washboard section of Interstate 10 from Lafayette to the Atchafalaya Spillway. It was supposed to be improved in 2013. As it has on so many occasions, the Jindal administration refuses to face the facts.


Number of the Day:
$141 million – Budget deficit in the 2013-14 fiscal year, using the accounting rules that state officials used until last week. (Source: The Advocate)