State Treasurer John Kennedy rebuffed Gov. John Bel Edwards’ plan to stabilize the state’s budget saying his plan would eliminate the now $940 million deficit without raising any taxes.
In the governor’s address Thursday, Edwards said the state budget situation is dire, and in order to close the gap, taxes would have to be raised and cuts would have to be made. His hope is to do so without cuts to healthcare and education.
With the threat to cut the TOPS scholarship program, Kennedy says at Friday’s Lunch Bunch at the Exacta Inn, it will be funded and the governor’s claim is nothing more than a scare tactic.
“He wants to implement the largest tax increase in the history of our state,” he said. “What Gov. Edwards is telling Louisiana families and Louisiana businesses are you have to cut your budgets so state government doesn’t have to cut its budget. This is not the first problem with state budget Louisiana has ever had. I’ve never known the state budget not to have a problem. We will get through this, but we’re not going to get through it by raising taxes.”
Kennedy, who is also running for the U.S. Senate, says in 2005, the state budget was $16.5 billion. Today, it is $25 billion, adding it is a 40 percent increase over a 10 year period when the nation’s gross domestic product has only grown by 25 percent.
“It’s not complicated,” he said. “Each year, our legislature, encouraged by the then-governor has spent more than they took in by papering over it by raiding every state savings account and by accounting tricks.”
He went through a list of what’s on tap for the special session that began Sunday – raise personal income tax, sales tax, corporate income tax, corporate franchise tax, inventory taxes, business utility taxes, telephone taxes, cigarette taxes, liquor taxes and impose a new internet tax.
He briefly laid out his plan that would plug the holes without defunding TOPS, LSU football and the state’s hospitals and college systems. There is $400 million dedicated to 156 special funds called statutory dedications, he said. The first step is to undedicated those funds.
“These little funds are not locked up by the state constitution,” he said. “These funds are set up by a majority vote, they can be unset up by a majority vote.”
It doesn’t mean these funds would be unfunded, he says, it just means they would have to compete with other funds such as healthcare, roads and the college systems to be a part of the budget.
The second step is to do away with the reported 19,000 consultants on the state’s payroll, he said. In 2015, he says more than 4,000 new consultants were hired.
“In the last few months, they retained a consultant – they are paying him $1.1 million – to design a new sculpture for one of our public hospitals,” he said. “They’re paying $11.6 million to a lady in Baton Rouge to develop a communication and marketing plan for the Louisiana Department of Economic Development.”
He says an out of state agency has also been hired to develop a website for the food stamp agency.
The third step, he says the state needs to cut the number of managers and the fourth is to root out fraud in the Medicaid system which is costing the state roughly $450 million.
He says the state spends $9 billion for Medicaid, and according to figures from the federal government, 10 percent of that money paid out is attributable to fraud.
“These four, if done correctly, will save between $500 million and $1 billion, and we haven’t raised taxes a penny,” he said. “We can fix this problem. I know we can fix it, because I’ve watched Louisiana families and businesses live within their means every single day. It is now Louisiana state government’s turn.”
The duty of the Louisiana State Treasurer’s office includes the responsibility for the custody, investment and disbursement of the public funds of the state.