Louisiana ranks 43rd in Truth in Accounting 50 State Study

Each Louisiana taxpayer’s financial burden equals $16,800. Read report here:

2009 Louisiana Financial State of the State

Fiscal Watchdog Ranks Louisiana 43rd in Nation for Indebtedness

(The Pelican Post) The Institute for Truth in Accounting’s state ranking for assets relative to liabilities, released this week, finds Louisiana to be the second most indebted state in the South.

Despite a balanced budget requirement, Louisiana has still managed to acquire $21 billion more in liabilities than it has assets to offset them. That equates to $16,800 per taxpayer, even worse than California’s $15,100. In the South, only Kentucky surpasses Louisiana with $23,800 per taxpayer.

Four states—Wyoming, North Dakota, Nebraska, and Utah—lead the way with assets greater than their liabilities. At $15,100 per taxpayer, Wyoming has the highest positive balance.

Connecticut and New Jersey are far below the rest with their financial burden at $41,200 and $34,600 respectively. Illinois, Hawaii, and Kentucky round out the bottom five.

The taxpayer burden represents the funds that would be needed to pay the commitments the state has already accumulated divided by the state’s taxpayers, and it includes pension and retiree health care obligations.

“If governors and legislatures had truly balanced each state’s budget, no taxpayer’s financial burden would exist,” says Sheila Weinberg, Founder and CEO of the Institute. She continued, “A state budget is not balanced if past costs, including those for employees’ retirement benefits, are pushed into the future.” (Listen to an interview with Sheila Weinberg – 17 minutes.)

Shiela Weinberg interview with Louisiana’s Pelican Inst. for Public Policy

 Podcast interview:

Sheila Weinberg podcast interview with Louisiana’s Pelican Inst. for Public Policy

Louisiana Gov. Bobby Jindal outlines $107 million in state budget cuts

BATON ROUGE — Gov. Bobby Jindal today said it’s time for state agencies to stop “whining” as he rolled out $107 million in mid-year budget cuts that will fall heavily on health-care and higher education.

Jindal’s remarks came hours after the Joint Legislative Committee on the Budget formally recognized a $106.7 million deficit from the 2009-10 fiscal year, which must be plugged during the current budget cycle.

“We don’t need whining, we do need leadership,” Jindal said.

The governor plans to order an executive order later today outlining the specifics of what will be cut, but he confirmed that $34.7 million will come from public colleges and universities, and $20.8 million will be taken from the Department of Health and Hospitals.

Lawsuit claims $200M owed to Louisiana ‘rainy day’ fund

(Bloomberg Business Week) A lawsuit filed Monday challenges the way state lawmakers balanced last year’s budget with $200 million from Louisiana’s “rainy day” fund and seeks a repayment that could damage this year’s budget.

Former state Rep. Ron Gomez of Lafayette is one of two plaintiffs on the lawsuit, which claims legislators violated the state constitution by not refilling the rainy day fund after using it to help close a deficit in the fiscal year that ended June 30.

The repayment issue was at the heart of a dispute between House and Senate leaders in budget negotiations in the last legislative session. Senate leaders won the debate, arguing that a 2009 statutory change doesn’t require the rainy day money to be repaid for years, and a majority of House members and Gov. Bobby Jindal went along with that interpretation.

The lawsuit, filed in East Baton Rouge Parish district court, argues that a statute can’t trump a constitutional provision governing the fund that requires the fund to be repaid. The lawsuit calls the statute illegal.

Gomez and co-plaintiff Bob Reid of Baton Rouge list themselves as residents and taxpayers on the lawsuit. In a joint statement, the pair said they filed the lawsuit to prevent state officials from repeatedly raiding the fund.

“Our state government is attempting to avoid its responsibility to balance the state budget through the traditional means of regulating spending and revenue levels. If allowed to continue, these actions will quickly result in the exhaustion of the fund, and will place Louisiana back in the precarious and unstable fiscal condition which the fund was designed to prevent,” Gomez and Reid said.

Louisiana: Economic development in bad budget times

(Business Week) Gov. Bobby Jindal’s state incentive-fueled plan to create jobs in Louisiana could be on a collision course with a state budget totally awash in red ink.

The administration’s drive to bring new business to the state — and, naturally, increasing the number of jobholding taxpayers — has resulted in several major projects that are providing immediate employment boosts and the future of more.

Of course, this has cost money and Louisiana has had little choice, if it wants to compete with the rest of country for major business projects, to shell it out in what often amounts to a bidding war between taxpayers’ money from different states.

The alternative, especially with a tax system generally rated not-so-friendly to business, was shown during the 1990s when Louisiana was caught standing around as other southern states nabbed big projects, especially in the automotive industry.

Jindal has not been hesitant to join the fray, committing $363 million from a “megafund,” to nab such projects as a ConAgra sweet potato processing plant that opens in Delhi in November, the state-aided purchase of a chicken-processing plant in Farmerville, a specialty chemicals plant in Plaquemine and the federal city in New Orleans.

In 2009 alone, according to a state report, Louisiana committed more than $357 million toward new business investment. The report said Louisiana secured expansion commitments from 23 companies and 10 new business projects, retaining 7,900 jobs and eventually creating up to 8,100 new positions. Two programs aimed at small businesses generated 2,250 new jobs and 220 new businesses, the report said.

But on the other side of the coin now is a budget short in state revenue by about $1 billion in the upcoming fiscal year, and schisms already are developing about what to do to fix it.

The megafund, suddenly, has to line up with everything else in the budget. Louisiana Economic Development head Stephen Moret says the state has the money in place to be in contention now for about 10 large projects. But he warns there won’t be much money left to jump into additional frays for the next year or two.

Not only is no one talking about putting more money in the fund, some legislators have suggested that what unobligated money is left — about $55 million — may be expropriated for other budget uses.

Louisiana Budget Analysis

Louisiana Comptroller’s website:  http://www.doa.louisiana.gov/osrap/index.htm
Louisiana’s Comprehensive Annual Financial Reports can be found at:  http://doa.louisiana.gov/osrap/CAFR-2.htm

Louisiana is required to pass a “balanced budget”. Article VII, Section 10 of the Constitution ratified in 1974 states appropriations by the legislature from the State general fund and dedicated funds for any fiscal year shall not exceed the official forecast in effect at the time the appropriations are made. Moreover, the legislature must “establish a procedure to determine if appropriations will exceed the official forecast and an adequate method for adjusting appropriations in order to eliminate a projected deficit.” Finally, if a deficit exists at the end of the fiscal year, the legislature has until the end of the next fiscal year to eliminate the deficit. Accordingly, law forbids the carrying over of a deficit from one year to the next.

The Louisiana Constitution limits appropriations to the appropriations limit from the previous year, adjusted for inflation and the change in population. This is commonly called “budgeting for fiscal discipline,” and is a way to keep the growth of appropriations from outpacing the growth in revenues from year to year.

Despite these limits and the Constitution’s requirement that legislature should eliminate deficits, the Budgetary Comparison Schedules reported budget deficits (negative net transactions) for each of the three years studied.

The major governmental funds are the General Fund, the Bond Security and Redemption Fund, and the Louisiana Education Quality Trust Fund. The non-major governmental funds are also known as special revenue funds. All of the major funds are budgeted including some Special Revenue funds (non-major). Therefore, most but not all funds are budgeted. The information necessary for analysis is not all present within Budgetary Comparison Schedules: beginning and ending balances are missing.

CAFR Timeliness	All Governmental Funds Items (in millions)	GAAP Basis*	Budgetary Basis
	FY2005 Beginning Balance	$ 12,206	$ -
	Net Transactions	$ 1,153	$ (490)
272	FY2005 Ending Balance	$ 13,359	$ (490)
	Prior Period Adjustment	$ 5	$ 490
	FY2006 Beginning Balance	$ 13,364	$ -
	Net Transactions	$ 1,469	$ (291)
184	FY2006 Ending Balance	$ 14,833	$ (291)
	Prior Period Adjustment	$ 6	$ 291
	FY2007 Beginning Balance	$ 14,839	$ -
	Net Transactions	$ 2,886	$ (1,501)
187	FY2007 Ending Balance	$ 17,725*	$ (1,501)

* The GAAP Basis balance is not an accurate representation the State’s financial condition, because significant liabilities are not included. These liabilities for the pension plans and for other post employment benefits, such as health care.