Wednesday, 06 January 2016 20:42

Pearson Cross: Louisiana budget disaster, Jindal’s bait and switch, eliminating universities

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louisiana capitolLouisiana is a budget disaster with not too many options.  In part two of our conversation with Dr. Pearson Cross of University of Louisiana, we discussed the severity of the budget gap between revenues and expenses.  In this segment, we talked possible solutions, Medicaid expenses, the Jindal Administration using bait and switch practices, the possible losers and reducing the number of universities in the state, a position favored by many conservatives.

Below is a summary of the interview.  Please click on the video to see the actual conversation


8:33  last legislative session, we thought the budget was balanced. It turns out that it was not balance and that we are still roughly $750 million in the hole. Plus, the budget situation has worsened. But economically speaking it's too early to tell about the revenues. One of the reasons that we’re in trouble is because the corporate taxes are down, oil prices are down, sales taxes a down and things that we count on for revenue-wise are down and we don't know exactly where will it end up but there are some things that we can do to get to a a reasonable balance between expenditures and revenues. For example, Medicaid is very expensive and this is even prior to bringing in the expansion of Medicaid, so they need to figure out what to do about the Medicaid before it swamps us all.


10:18 regarding the federal government approving the state private public partnership agreements, the last (Dr. Cross heard about it) heard about it, it had been rejected. Louisiana has been using a bait and switch with dollars from the private hospitals to draw down Medicaid dollars and the Feds didn't like the accounting. This is what Edwards used to do and Jindal followed suit. We came up with another solution but I don't think that we have found out yet whether the second solution is going to suffice for the feds.


Last year the business community took the biggest hit in terms of raising revenues and it appears the business community will continue to take the hit. There are two major sources they can go after—first, right that you can still discount your state income tax to your federal income taxes, they would be around $750 million.  Second, tinkering with the homestead exemption would be another, but there would be a lot of resistance for that one.  There's the fracking (horizontal drilling) exemption, over billion dollars last five years, the film exemption-- the last time (2015) they capped it at 300 million. In looking at these exemptions, the question is to continue the exemptions at that level of cutting higher Ed, Medicare or cutting K-12-- it starts to put those exemptions into proper perspective.


Regarding the consolidating of the universities, reducing the number of universities, closing down certain universities, after what Jindal has done to the universities in terms of funding and increasing the burden on the backs of the parents and students in terms of paying out-of-pocket payments and federal loans brought down in debt, don't think that people have much of an appetite to go after higher education. Also at this point, when Jindal started, there was about a 65-35 split in higher education with the state coughing up about 65%, the state has pretty much reversed the split although it varies from institution to institution. The Universities are getting about 30 to 35% of the money from the state in about 60-65% from other revenue sources including student tuition. It's not the kind of money that used to be there to go after. Another thing that should be dispelled is the idea that you can scale and reduce expenditures by closing universities. I just don't think you can do that. You will gain a few positions here and there, you will not run electricity in some buildings that you currently running electricity but by and large without a severe dislocation to the higher education delivery system that can't save the kind of money that were talking about out of higher education and you can't do it quickly and we need money right away






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