By Stephen Winham (Special to LouisianaVoice)

I became the state budget director in 1988. Because we had consistently spent more than we had taken in since 1984, we faced a $1 Billion dollar budget and cash flow hole in a budget less than half the size of today’s. We literally did not have the money to pay our day-to-day bills and, like too many of our citizens, had to hold off paying them until we had the cash. We were flat busted.

In an effort to ensure this never happened again, we enacted a comprehensive package of budget reforms, including establishing an official revenue forecast; prohibiting the use of one-time money for recurring expenses; requiring a balanced budget from initial presentation through enactment and to be maintained throughout the year; providing that any interfund borrowing (the mechanism that enabled us to go totally broke in 1988) had to be repaid by the end of the year in which it was borrowed, and many others.

To address the immediate emergency, we took the unprecedented step of creating a special taxing district that issued bonds we paid back over 10 years by dedicating one cent of our sales tax to debt service.

We began to diversify our economic revenue base. For example, we went from a 40% reliance on mineral revenues to a less than 10% reliance on them today. We raised other taxes, including, most notably, sales taxes.

We took full advantage of a federal Medicaid program paying high rates to facilities serving a disproportionate share of poor people (we made an annual “profit” of $700 million from this program during its peak).

We enacted the lottery, riverboat, and land-based casino gambling.

All of these kept us going until 1995 when our economy finally began to perform really well and did so through 1998. Our economy slowed down in 1999 and it was necessary to pass more taxes.

In 2002, the legislature passed, and the state’s voters approved a plan by Representative Vic Stelly that substituted increases in income taxes for 4 cents of sales taxes on food and utilities and placed these exemptions, along with those on pharmaceuticals, in the state constitution. The reason: Because sales taxes are regressive and because income taxes generally respond better to our economy than sales taxes. In my opinion, and that of many others, the Stelly Plan was the best fiscal legislation passed in our history.

We were doing pretty well until 2005 when Katrina struck. Ironically, recovery from Katrina fueled our economy to the point that by the time Governor Jindal took office in 2007, we had a $1.1 Billion surplus. Governor Blanco’s last proposed budget was $29.2 billion, of which over $8.0 billion was disaster relief money. The legislature enacted a $32 Billion budget that year, including the $8.0 billion in non-recurring money.

So, what happened?

Well, remember those laws we passed to ensure we engaged in sound budgetary practices? We began to ignore them and we spent the $1.1 Billion surplus and every other pot of one-time money we could find. We repealed HALF, NOT ALL, of Stelly – the income tax increases that would be generating about what we lose in the sales tax exemptions still on the books today -about $700 million.

We cut corporate taxes in half – by a cool Billion.

We pretended we had a balanced budget every year, but using common sense and the letter of the laws we enacted, it is clear we, in fact, DID NOT. And, although cuts were made – state funding to higher education, as one example, has been cut by $500 million – we NEVER made the cuts necessary to balance recurring spending with recurring revenue. Why? According to Kristy Nichols, Commissioner of Administration, as quoted in 2013, doing so would result in “needless reductions to critical services.” WHAT? Are you saying you didn’t cut the budget because you couldn’t? Or, are you for cutting the budget, but you really don’t want to do so?

Governor Jindal continues to be widely quoted, to this day, saying we need to live within our means. If that is true, why does he not present budgets that do so? As long as projected revenues from reliable, stable sources do not equal projected necessary expenditures, we will NEVER have a balanced budget.

Could anything possibly be simpler, or make more sense, than balancing what you plan to spend with what is coming in so you don’t dig a hole for yourself?

It is certainly easy to understand why it is difficult to make hard cuts when cash is, or even may be available, but willfully allowing gross fiscal instability to continue indefinitely is a violation of the public trust and ultimately leads to wasteful spending and the inability to see true inefficiencies because the fiscal house is always on fire. It is beyond time we were presented with an honest budget on which to make honest decisions.

So, you might rightly ask, “How would you fill the $1.6 Billion hole we read about every day in the papers?”

There are an almost infinite number of ways to do so. Here’s one:

$1.600 reported gap

($0.160): Don’t Fund Inflation and other continuation costs. We rarely do, anyhow.

($0.180): Make cuts pursuant to consultant “efficiency” recommendations. We ought to get something for the $7 million we blew on this contract.

($0.100): Increase tobacco tax to the southern average

($0.700): Restore the income tax provisions of the Stelly Plan

($0.149): Eliminate the refundable tax credits proposed by the governor, except the inventory credit.

($0.100): Cap film tax credits at $150 million

($0.200): Eliminate exemption from severance taxes on horizontal wells. This was new technology when the exemption was granted. It certainly isn’t now, so no incentive is needed.

($0.011): A rounding figure, based on the Executive Budget. Or do $11 million of the $415 million in strategic cuts recommended by the governor – or, dozens of other possibilities.

$0.000 Remaining Problem.

Too simple, right? And, perhaps, other holes could be poked in my scenario as well, but it proves it is possible to take a pragmatic approach, combining cuts with a limited number of revenue measures for a relatively simple solution. We often make things a lot more complicated than they are. I am convinced our government leaders often make simple things complicated in hope citizens won’t know and question what’s going on.

Regardless of what happens we must have an honest budget. If balancing recurring expenses with recurring revenues means making draconian cuts, so be it. Because they have been misled repeatedly, the bulk of our citizens will never believe we have a problem (or one that can’t simply be solved with cuts) until they experience the reality of a true “reform” budget that raises no revenues and cuts services to achieve balance. I sincerely hope it doesn’t come to that, but it may be the only path to real reform.