State treasurer: Less revenue to lead to future labor cuts

The state budget crisis won't be solved by raising taxes, state treasurer John Kennedy said Thursday.

Kennedy was the featured speaker at the monthly West Calcasieu Association of Commerce meeting, and the bulk of his speech regarded the state's fiscal crisis, the constitutionally mandated balanced budge, and what legislators need to do to fix the problem.

"We're not going to have $29 billion in the state to spend next year, or the year after that, or the year after that. If we're fortunate, we'll have around $26 billion. For a variety of reasons, we're going to have less revenue," Kennedy said.

"Our legislature and our governor will have to face the same kind of decisions that Louisiana families and businesses are familiar with: What do we do?"

Kennedy was a member of the governor's Commission on Streamlining Government, which met throughout 2009 and hashed out what needed to be done to parse government down to a more manageable size.

However, the commission ultimately rejected much of Kennedy's advice, he said.

"Now the discussion is going to be shifted to our legislature, which is where it really matters, as we debate this quandary we find ourselves in," he said.

Kennedy, a Republican, said his advice to colleagues followed his party's ideals, but also took in other practical aspects.

"Number one: Do not raise taxes, under any circumstances. That is, in part, an ideological statement, I confess, because I believe men and women, society, is better off when people are allowed to keep more of the fruits of their labor. It's also a practical statement. [Taxes] won't solve the problem."

Instead of raising taxes, state government should reduce spending, and Kennedy gave his thoughts to the commission on how that should go.

"We rank No. 1 in the South and No. 8 in America for the number of state employees per 10,000 people. We will never be No. 1 in the South in education, No. 1 in the South in health care, No. 1 in the South for coastal restoration, until we are no longer No. 1 in the South for state employees."

Kennedy's recommendation involved an elimination of 5,000 positions per year for three years, not through firing, but through attrition. Kennedy's plan was to retire the position after a state employee left.

"This would save the Louisiana taxpayer anywhere between $600 million and $1 billion depending on the positions eliminated," he said.

"I'm not naive. I understand that eliminating 15,000 jobs eliminates a fertile source of patronage. But we think we have a choice to make: we can either be No. 1 in the South for patronage, or No. 1 in the South for progress. We can't do both."

Kennedy also said that a rather huge number of private contracts with consultants in the state are budgeted, and have no need to be.

"Louisiana has 16,000 consulting contracts. We spend about $7.5 billion a year on these. I'm not saying that they are all a waste; in fact, privatization, when done properly can be a benefit. But when you're spending a quarter of your budget on consulting contracts, maybe someone should take a look at those 16,000 and see if every single one of them are necessary. Nobody is doing that," Kennedy said.

The issue, Kennedy said, isn't whether the consulting expenditures are important, but rather their degree of importance, whether they are more important that road work, coastline restoration, and education.

"The question we need to ask ourselves, before we hire an Oakland company to teach our kids how to play better at recess, is what's more important? $94,000 for this, or $94,000 for higher education, or health care, or roads, or coastal restoration?"

Kennedy said that it's likely the state of Louisiana could remove 20 percent of it's consulting contracts in the state budget and 'never know the difference.'

"That will save the taxpayers of this state $1.5 billion," he said.

Southwest Daily News