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A cautionary tale

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Illinois

Many of the state’s economic analysts say a structural budget deficit emerged and then grew under former governor Bobby Jindal, who, during his eight years in office, reduced the state’s revenue by offering tax breaks to the middle class and wealthy. He also created new subsidies aimed at luring and keeping businesses. Those policies, state data show, didn’t deliver the desired economic growth. This year, Louisiana has doled out $210 million more to corporations in the form of credits and subsidies than it has collected from them in taxes. […]

Initially, Jindal had been able to cut taxes because Louisiana was buoyed by billions in federal money, an influx to help with the recovery from Hurricane Katrina, which struck in 2005. But as that money ran dry, Jindal said he would veto any bills that would push taxes back to where they had been. Instead, to plug budget gaps, Jindal relied not just on cuts but also on controversial, one-off fundraising methods. The state sold off assets, including parking lots and farmland. It cleaned out money from hundreds of trust funds — among them, one intended to build reefs for marine wildlife. It pieced together money from legal settlements. […]

Then, as Jindal was on the campaign trail last year, fossil-fuel-rich Louisiana was hit with one more obstacle: The price of oil and natural gas fell off a cliff, causing a retrenchment in an industry that provided the state with jobs and royalties. […]

The math is daunting: For the fiscal year that ends June 30, Louisiana is facing a $940 million deficit, roughly one-eighth of what the state typically doles out from its general fund in a year. For 2016-2017, which begins July 1, the gap is $2 billion. […]

On Jindal’s watch, nearly every agency in Louisiana shed employees, and state lawmakers say some teetered because of the losses. The Department of Children and Family Services shrank to 3,400 employees, from 5,000 in 2008, and social workers began carrying caseloads larger than national standards. The state also cut funding for youth services and mental health treatment. […]

In Louisiana’s capital, on a university campus just seven miles north of the government offices, is perhaps the most acute evidence of the funding cutbacks — and the mounting concern about what will happen next. At Southern University and A&M College, a historically black institution along the Mississippi River, mold spreads across building walls, and rats scurry through dormitories. Eighteen buildings have roof leaks; in two, raw sewage occasionally belches onto the floor. An entire section of the library is off limits because of a perpetually broken fire alarm.

Keep in mind that this was done by design. They didn’t expect a crash in energy revenue, but everything else was done on purpose. And now… chaos.

posted by Rich Miller
Monday, Mar 7, 16 @ 11:31 am

Comments

And all the good conservatives have ample proof that government doesn’t work. My goodness look what a mess the government made!!

Comment by Johnny Pyle Driver Monday, Mar 7, 16 @ 11:33 am
I keep cutting and cutting but this board is still too short.

Arthur Laffer’s curve only works when tax rates are confiscatory, meaning well above 50%. Then you can realize more revenue by cutting taxes. Below that, cutting taxes simply means less revenue to fund programs.

Which is clearly the goal of Republicans — to defund government. Now it’s our turn in Illinois. Are we going to follow the lead of Louisiana and Kansas or Minnesota and California?

Comment by 47th Ward Monday, Mar 7, 16 @ 11:36 am
Well, it appears that Illinois is following the “Louisiana Model” or maybe the “Kansas Model” It appears that governors of these states and our Governor are all cut from the same cloth when it comes to trashing state budgets for political and ego gains

Comment by JB Monday, Mar 7, 16 @ 11:38 am
You could rewrite it for Illinois just by substituting High Speed Rail for Hurricane Katrina and Coal related EPA regulations for Oil Prices …

Comment by RNUG Monday, Mar 7, 16 @ 11:38 am
“A structural budget deficit emerged and then grew under former governor Bobby Jindal, who, during his eight years in office, reduced the state’s revenue by offering tax breaks to the middle class and wealthy. He also created new subsidies aimed at luring and keeping businesses.”

But no free motorcycle lessons?

– MrJM

Comment by @MisterJayEm Monday, Mar 7, 16 @ 11:38 am
bill clinton raised taxes on the wealthy and we had an economic boon and a budget surplus. bush dropped taxes and we have been growing the deficit ever since.

Mark Dayton raised taxes and min wage and is having an economic boon…. time and again when taxes are reduced the economy goes down.

Comment by Ghost Monday, Mar 7, 16 @ 11:43 am
Doing “more with less” is not a sustainable strategy. Eventually you do less with less. Sometimes catastrophically less . . . .

Comment by OutHereInTheMiddle Monday, Mar 7, 16 @ 11:49 am
I read this article when it came out! I even read it out loud to the spouse. It’s exactly the same playbook. I’d keep eyes on DCEO giving out EDGE tax incentives. I’d also shut down any idea of an Economic Development Corp! My God, they’d dole it out then hide it and we’d be none the wiser without FOIA protections. Madigan was right to create a committee to investigate it. Frankly if I were an investigative journalist I’d be all over DCEO right now. I bet a lot of work has been done in the dark already. I do not want to end up like Louisiana!

Comment by Honeybear Monday, Mar 7, 16 @ 11:55 am
Cutting taxes is Republican orthodoxy. Facts, science and common sense no longer matter.

If it doesn’t work (has it yet?), blame Democrats, illegal immigrants, legal immigrants, the Chinese, whoever.

Thank you Grover Norquist.

Comment by Sir Reel Monday, Mar 7, 16 @ 11:58 am
What else should be expected from science deny(ers). Obviously math is also an area to deny. That is the problem if you believe that by cutting revenue for a state, there will be a miracle where the state eventually will have more income. Also government service improves when there are fewer people to provide the service.

It is long overdue for these folks to provide facts rather than tag lines.

Comment by illinifan Monday, Mar 7, 16 @ 12:15 pm
If Rauner isn’t stopped I suspect Jindal will be viewed as a better governor.

The Louisiana-Kansas-Wisconsin model has been an utter disaster for those states. I’m pretty positive that’s what Rauner has in mind in a state that clearly wants no part of it.

He’s just using leverage to try to shove through what (at most) only 30% of the people want.

It’s too bad it isn’t easier to recall him.

Comment by Chucktownian Monday, Mar 7, 16 @ 12:19 pm
Illinois is no Louisiana. Whatever they do down there has, and always will be, very different from us. Radically different cultures, histories, climates, political histories and governments.

What works down there economically, or doesn’t, really can’t be compared - in my opinion.

Comment by VanillaMan Monday, Mar 7, 16 @ 12:23 pm
The current governor’s threat to cancel LSU’s football season woke up a lot more of the public in Louisiana over the budget issue than did the shutdown or cutbacks of the multiple social service providers here.
I honestly can’t guess what issue might begin truly moving the needle to get the budget issue resolved in Illinois.
For the record, Louisiana’s economy has always risen and fell with the oil industry. The state has hobbled along since the oil bust of the 1980’s. There has never been any non-oil industry that has truly stepped up to diversify the state’s economy.

Comment by Father Ted Monday, Mar 7, 16 @ 12:28 pm
I wasn’t clear from the article - have they cut these business subsidies they are spending $200 mil/year or not? If not, that’s a bitter pill to swallow given all the other cuts they are doing.

Comment by ChicagoVinny Monday, Mar 7, 16 @ 12:29 pm
If facts or evidence do not matter cutting taxes and services as a, mostly, singular strategy for getting elected and economic growth are 50% effective (hint: the 50% is getting elected).

Comment by JS Mill Monday, Mar 7, 16 @ 12:33 pm
Supply side economic theory has been debunked time and again. What wealth it yields is maldistributed to the top tiers, while the middle class shrinks and the ranks of the poor swell. Yet we still have the debate raging in Illinois, with an 8 month budget impasse causing untold hardship to the disadvantaged. For what?

Comment by out of touch Monday, Mar 7, 16 @ 12:39 pm
What is the link between Louisiana, Wisconsin, Kansas and Illinois?

For all the talk about Wisconsin, income tax rates are much higher than Illinois. Rauner has said he would raise taxes if there were reforms passed. Only a fool would believe we don’t need any reforms in Illinois. Illinois residents have the lowest confidence in their government of all 50 states but democrats will not vote to reform anything.

Comment by Iron Duke Monday, Mar 7, 16 @ 12:56 pm
@ Iron Duke
=Only a fool would believe we don’t need any reforms in Illinois.=

I agree, reforms are necessary. However that does not mean by extension that I agree with Rauner’s view of reforms.

Comment by pundent Monday, Mar 7, 16 @ 1:10 pm
Isn’t this the blueprint that our governor in Illinois has adopted?

Comment by forwhatitsworth Monday, Mar 7, 16 @ 1:23 pm
Supply-side Reaganomics Voo-Doo fails again. Toto, we aren’t in Kansas, NY, Louisiana, Ilinois anymore.
There is a big difference between wishful theorys that will-work-wont-they and actual documented methods and business levers. Sounds good is not acceptable documentation to sustain any legislative passages.

Comment by Team Warwick Monday, Mar 7, 16 @ 1:24 pm
@ Iron Duke “Illinois democrats will not vote to reform anything”

Let us count some reforms voted on by the Dems that I remember off the top of my head. There are more, I am sure.

Workman’s Comp changed 2011
SMART Act 2012
Illinois Tier 2 Pension 2013
SB-7 2011 makes teacher tenure and layoffs contingent on student achievement and makes it easier for school districts to dismiss tenured teachers deemed ineffective based on student performance.
Juvenile Justice Reforms 2010

Comment by illinifan Monday, Mar 7, 16 @ 1:40 pm
In the private sector, getting more revenue is always a major focus. I don’t see either side making the case for more revenue.

Comment by Last Bull Moose Monday, Mar 7, 16 @ 1:57 pm
“Buh… buh… but that’s unpossible! Louisiana had a miracle cleansing hurricane and everything!” — Kristen McQueary

– MrJM

Comment by @MisterJayEm Monday, Mar 7, 16 @ 2:03 pm
“Isn’t this the blueprint that our governor in Illinois has adopted? ”

Yes, the Tea Party/Republican Governors all seem to be using the same playbook. This is just a few of the states who have used or currently using this playbook OH, TX, IN, WI, LA, CA, KS.

Comment by Mama Monday, Mar 7, 16 @ 3:23 pm
I’m quite certain Darth Arduin had a hand in starting us down the path towards Kansas and Louisiana!

Darth Arduin ” Illinois, I find your lack of faith in the Laffer curve disturbing.”

Comment by Honeybear Monday, Mar 7, 16 @ 3:24 pm
Robert Reich puts it pretty well:
“The establishment doesn’t get that most Americans couldn’t care less about economic growth because for years they’ve got few of its benefits, while suffering most of its burdens in the forms of lost jobs and lower wages.”
robertreich.org

Jindal was hoping to ride a “Louisiana Miracle” all the way to the White House.
Oh well.

Comment by Anon Monday, Mar 7, 16 @ 5:33 pm
Well, at least when some of our universities close, we won’t be losing students to Louisiana. Theirs will already be shuttered.

Comment by up2now Monday, Mar 7, 16 @ 6:08 pm
–Which is clearly the goal of Republicans — to defund government. Now it’s our turn in Illinois. Are we going to follow the lead of Louisiana and Kansas or Minnesota and California?–

Needs to be repeated: That clearly is the goal of the governor and the legislators he controls.

You can’t talk about fiscal responsibility when you’re running up these deficits. It’s “squeeze the beast.”

It would be swell if a few of those legislators could remember back to when they weren’t controlled.

Comment by wordslinger Monday, Mar 7, 16 @ 6:24 pm
Honey at 11:55. Never could I agree with you more. Careful though, DCEO has been a tool both Dems and Repubs have misused. If I were governor for a day, I would abolish this line item as fast as you could say “Nancy Reagan “.(my own little tribute). I would try to place these workers, but would make no promises. You see, Old Blue Dog has a score to settle .

Comment by Blue dog dem Monday, Mar 7, 16 @ 6:52 pm
It is on purpose. Google ALEC. American Legislative Exchange Council. They want chaos, a method of control.

Comment by Jimmy H Monday, Mar 7, 16 @ 6:53 pm