Uncertainty clouds state’s fiscal future

The state’s new fiscal year started on July 1 with a budget that lawmakers and the Jindal Administration say is balanced, but Louisiana’s longterm financial outlook remains as murky as ever as tax collections fail to impress and an ongoing review by national credit rating agencies is nearing completion.
The state’s revenue, meaning incoming cash, is around $7.1 billion year-to-date, which represents a 2 percent increase over the same period during the 2013-2014 fiscal year, according to the latest net receipts report that runs through the end of May.
While that’s a positive sign on paper, Treasurer John Kennedy said that the cash usually realized through severance taxes remains weak and there’s a noticeable downturn in corporate and franchise tax collections.
Looking further ahead, there have administration forecasts that predict budget shortfalls of $1 billion or more annually through the 2018-2019 fiscal year.
The Legislature and Gov. Bobby Jindal just addressed a $1.6 billion shortfall during the session that adjourned last month. Questions are still lingering in regard to the fixes — whether they’re permanent or if they simply set up the state for another deficit after the next crop of state officials are elected in the fall.
The state was already tiptoeing around the major rating agencies before session convened, and rightfully so. Tough questions were being asked about how the shortfall would be eliminated and the agencies wanted to know how structural deficiencies would be corrected.
Credit rating agencies have the authority to determine the state’s ability to pay back debt and make timely interest payments. Financially, they can sink a state with the stroke of a pen by making it more expensive to borrow money.
Now that the session has been adjourned, the rating agencies are back and Jindal, Kennedy and Commissioner of Administration Kristy Nichols have spent time in discussions with them over the past few weeks.
“We had always intended, with the rating agencies, to come back together with them once the budget was complete,” said Nichols. “There were goals they wanted to see accomplished and we did that, like cutting one-time revenue sources down by half and creating recurring revenue.”
Kennedy said he was surprised that he was not included in the very first calls with the administration and rating agencies, but he has offered his own take on the session to the agencies since then.
“I’m not going to talk about the Louisiana miracle and all that,” the treasurer said prior to one such call. “I’m going to try to keep them from downgrading us. I think it’s a 50-50 shot.”
Citing temporary fixes for the most recently completed budget year and other concerns, Moody’s Investors Service and Standard and Poor’s Rating Services both reclassified the state’s status in February from “stable” to “negative.”
The state should learn over the next few weeks whether its credit rating is lowered as a result of the recent regular session and the administration’s budget practices. Depending on what happens, it could be an early sign of what’s to come as a new governor and Legislature are sworn in in January.
ATC commissioner may run again
After stints in the state House and Senate, Troy Hebert found himself in 2010 leading up the Office of Alcohol and Tobacco Control via an appointment by Gov. Bobby Jindal, who also tapped Hebert to serve as his legislative liaison this year.
But Hebert may not be done with elected office, he revealed during a recent interview in the Capitol’s Memorial Hall, in the shadow of the statue of Bienville, Louisiana’s relentless French period governor.
“Well, as commissioner of ATC I probably have one of the best appointed jobs in the state. I basically regulate fun for adults,” Hebert said laughing. “We have a lot of thirsty people in this state. Although I have to admit, I did enjoy my time as an elected official. Having won five-for-five, I may have one more race left in me.”
Nichols not sure about what comes next
After nearly three years of serving as the point of Gov. Bobby Jindal’s spear on one controversial budget issue after another, Commissioner of Administration Kristy Nichols has built bridges and burned a few down in the Louisiana Legislature.
On the other hand, the role she has filled usually leads to another high-profile position in government or the private sector, if recent history is any judge. But with Jindal finishing up his final months in office, Nichols hasn’t yet revealed what her next move might be.
“I am hopeful that the level of loyalty and commitment that I have shown will help me find a right fit for where I’m headed,” she said. “I’ll be looking at both the private and public sectors for opportunities.”
Lawmakers have long been critical of her style, but a few did admit in interviews recently that they would want such an unwavering personality behind their own efforts if they were running the state.
“She uses her intelligence to be tenacious and that’s okay,” said Sen. Bret Allain, R-Franklin. “I know she rubs a lot of people the wrong way, and I don’t always agree with her, but she has always been open to talk to me and has always listened. She’s one of the smartest women I’ve ever met and she’s dedicated to making the hard calls when she has to. That’s why she has the position she has.”
Coroner being recruited for Baton Rouge mayor
Republican donors are urging East Baton Rouge Parish Coroner Dr. Beau Clark to run for mayor, but they’re unlikely to sway the up-and-coming politician.
“Since I became coroner people have been encouraging me to look at the race and it’s flattering,” Clark said. “I’m honored. But I ran for coroner with a certain set of goals and I haven’t accomplished all of them. At this point I’m not interested, but I do not want to say no forever.”
Clark has made a splash on a number of issues by stepping outside of his normally-quiet elected position and into the media and political spotlight.
He grabbed headlines locally for revealing the staggering number of heroin deaths in the region, and for calling for a review of related laws. This year he has had a hand in statewide policy in regard to sexual review examinations.
He previously served as medical director for the state House of Representatives and the Department of Health and Hospitals’ Bureau of Emergency Medical Services.
They Said It
“If you don’t drink that Kool-Aid, sometimes you don’t get things in your district.”
-Sen. Jody Amedee, on the capital outlay process for winning construction projects in the Legislature, in the Associated Press
“You can’t take politics out of politics.”
-Sen. Greg Tarver, on capital outlay, in the AP
For more Louisiana political news, visit www.LaPolitics.com or follow Jeremy Alford on Twitter @LaPoliticsNow.