State Treasurer touts belt-tightening to close budget gap

By: Jamie Anfenson-Comeau
Louisiana State Treasurer John Kennedy told Eunice Rotarians Wednesday that the big battle facing the state is not the looming $3 billion budget deficit for the upcoming fiscal year, but the need to transform Louisiana government into a leaner, more fiscally responsible entity.

“It’s not really about the budget,” Kennedy said, “It’s about becoming a lower-cost state.”

To demonstrate his point, Kennedy displayed a graph depicting government spending over the past 23 years.

In 1996, Kennedy said, the state budget was $12 billion.

In 2005, before hurricanes Katrina and Rita, the state budget was $19 billion.

“As a result of the hurricanes, we had billions of dollars of federal disaster aid floating through the state; tens of billions. Billions of dollars of private insurance money, hundreds of millions of dollars of private charitable contributions made to Louisiana, and all of this artificially stimulated our economy,” Kennedy said.

“I knew then that it would never last; that this artificial economy was fool’s gold. But our legislators spent those tax collections as if they would never end,” he added.

In 2010, the budget is $26.9 billion; next year it is expected to be around $24 billion.

“We are going to have to make some changes,” Kennedy said.

Kennedy has proposed a 16-point plan which he claims will reduce the budget without cutting higher education and health care, the two areas of government where budget cuts traditionally fall.

“My plan will not touch our universities; it will not touch our health care,” Kennedy said, adding, “Our universities cannot take 35 percent across-the-board cuts; they just can’t,” in reference to the proposed state funding cuts for the next fiscal year.

Kennedy’s plan also does not call for raising taxes.

“You will never solve this problem by raising taxes; we can find those savings within our budget,” Kennedy said.

According to the Bureau of Labor Statistics, Louisiana has 258 state jobs per 10,000 people, which is higher than the national average of 143 per 10,000.

Kennedy said 17,000 people leave state jobs each year. The state should reevaluate those positions, and eliminate one-third of them.

According to the Legislative Auditor, the average state government manager supervises four state employees; 22 percent supervise only one employee.

Kennedy proposes requiring a minimum of ten state workers per manager, just as Texas and Iowa require.

One of the biggest sources of savings in Kennedy’s plan involves eliminating 10 percent of the state’s consulting contracts, and requiring the rest to renegotiate at a 5 percent reduction in cost, which Kennedy says would save the state $1.1 billion alone.

As an example, Kennedy noted a contract with a California program to assist students in playing at recess, and another one to promote seat belt usage among Hispanics in Rapides Parish.

Kennedy said that while most contracts are important, “anyone could find 10 percent that could be eliminated.”

Kennedy was first elected state treasurer in 1999. He won his third term as treasurer without opposition in 2007.

Prior to his position as treasurer, Kennedy served as secretary of the Department of Revenue, Special Counsel to Governor Buddy Roemer and Secretary of Governor Roemer’s Cabinet. He was also an attorney and partner in the Baton Rouge and New Orleans law firm of Chaffe McCall.

Kennedy suggests several other cost-cutting steps in his plan, which can be viewed online at www.latreasury.com.