BATON ROUGE, La. — Already, the state of Louisiana had gutted university spending and depleted its rainy-day funds. It had cut 30,000 employees and furloughed others. It had slashed the number of child services staffers, including those devoted to foster family recruitment, and young abuse victims for the first time were spending nights at government offices.
And then, the state’s new governor, John Bel Edwards (D), came on TV and said the worst was yet to come.
Edwards, in a prime-time address on Feb. 11, said he’d learned of “devastating facts” about the extent of the state’s budget shortfall and said that Louisiana was plunging into a “historic fiscal crisis.” Despite all the cuts of the previous years, the nation’s second-poorest state still needed nearly $3 billion — almost $650 per person — just to maintain its regular services over the next 16 months. Edwards gave the state’s lawmakers three weeks to figure out a solution, a period that expires March 9 with no clear answer in reach.
Louisiana stands at the brink of economic disaster. Without sharp and painful tax increases in the coming weeks, the government will cease to offer many of its vital services, including education opportunities and certain programs for the needy. A few universities will shut down and declare bankruptcy. Graduations will be canceled. Students will lose scholarships. Select hospitals will close. Patients will lose funding for treatment of disabilities. Some reports of child abuse will go uninvestigated.
“Doomsday,” said Marketa Garner Walters, the head of Louisiana’s Department of Children and Family Services. If the state can’t raise any new revenue, her agency’s budget, like several others, will be slashed 60 percent.
“At that level,” she said in an interview, “the agency is unsustainable.”
But even if Louisiana’s Republican-dominated legislature approves certain tax increases, as most expect, the state still would grapple with problems. The taxes — which could include hikes on everything from groceries to salaries — would dig into the pockets of citizens in a state where 18 percent live in poverty and where the median income is 20 percent below the national average. And the taxes alone won’t close the gap. Nasty cuts will still be necessary, meaning Louisiana will be taking more from its 4.6 million people while offering them less.
“I’m feeling kind of disrespected,” said Christian Washington, 18, a sophomore at Southern University who could lose a state-funded scholarship. “This was an incentive for me. I worked extremely hard. And now they’re trying to strip me of my work.”
A presidential bid
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.
Through a longtime adviser, Jindal declined comment for this story. The adviser, Curt Anderson, who was Jindal’s chief campaign strategist, said that the former governor had been “on a mission to grow the Louisiana economy, and he did it, and it required big changes,” including trimming government waste. Anderson said that the state’s population and the wages of workers are higher than they’ve ever been.
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.
For Jindal’s supporters, this was creative problem-solving that helped the state endure without crisis through his term, which ended in January. But in the eyes of Jindal’s opponents, the governor was resisting a more sustainable option — tax increases — that would have proven unpopular nationally among Republicans, whom Jindal was courting in a presidential bid.
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.
When Edwards took office, new estimates from state economists showed that an already large budget gap was $500 million bigger than they had anticipated. Greg Albrecht, Louisiana’s official chief economist, said the state has been “basically taken into a recession.”
'Years of mismanagement'
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.
“This was years of mismanagement by a governor who was more concerned about satisfying a national audience in a presidential race,” said Jay Dardenne (R), the lieutenant governor under Jindal and now the state’s commissioner of administration. Dardenne said Jindal had helped the state put off its day of reckoning in a way that mirrored a “Ponzi scheme.”
Dardenne was elected separately from Jindal and said he wasn’t “part of his inner circle.”
Jindal suspended his presidential campaign in November, saying he couldn't stand out in a "crazy, unpredictable election season."
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.
“When you cut those programs, it doesn’t change the need for people to get those services,” said state Rep. Walt Leger (D). “It just means you’re no longer providing them. Those folks end up in jail or wandering the street, not being treated for mental health issues, and all of those things have a huge societal cost.”
In recent days, lawmakers have zeroed in on a plan that would somewhat narrow the deficit for the rest of this fiscal year but barely make a dent in the $2 billion gap for next year. Lawmakers would raise sales and cigarette taxes while dipping further into a rainy-day fund. They would also use settlement funds from BP, the company responsible for a 2010 oil spill in the Gulf of Mexico. Still, massive cuts would still be required for hospitals and universities.
Rats and sewage
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.
“One elevator has been broken since 2013,” said Taysia Marie, a junior nursing student. “I’ve never seen it working.”
Since the 2007-08 school year, Louisiana has cut funding for higher education by 44 percent, the sharpest pullback in the nation; Southern has seen its funding cut 49 percent. During that time, the burden of supporting education has flipped: Whereas the state once provided 70 percent of the money its schools spent, now the students support the bulk of the costs — in the form of higher tuition.
Michael Reed, a spokesman for Jindal when he was governor, said in an email that Louisiana’s tuition rates are still $1,500 less than the national average. He said Jindal fought to protect Louisiana’s prized state scholarship fund, despite pressure from legislators.
School officials at Southern and at other institutions, including Grambling and Louisiana State University, have whittled away at expenses because of the state funding cuts. Southern placed staffers on furlough and cut support services for students from rough backgrounds. The school also put off some $180 million in maintenance and renovation, including plans that would bring buildings up to code for disabled students and fire safety, Southern’s chancellor, Ray Belton, said in an interview.
In part because of the decaying facilities, Southern was struggling to provide a “conducive learning environment,” he said. Graduation and year-to-year retention rates have slipped.
Now the school has been told to prepare for even less funding. Even with new taxes, higher education could be cut statewide by as much as $70 million for the rest of this academic year. In a worst-case scenario without new revenue, Southern initially said that it would be rendered virtually “nonoperational” and close its doors. But the school later backed away from that plan and said it could still function, though barely. It would shed 200 staff positions and eliminate 125 adjunct professors. It would cancel summer classes. Most campus offices would operate two or three days per week.
For students here and at other Louisiana universities, one of the more alarming parts of the budget crisis will hit them even if the state does raise new revenue. A popular “TOPS” scholarship fund — available to anybody in the state with a 20 ACT score and a 2.5 GPA — is depleted. Some students will lose their scholarships, and for a future batch of high schoolers, the fund will be unavailable. Belton said that many students were taking out new loans to deal with the rising tuition or stressing about how they would remain enrolled.
“We’re trying to provide for a middle class in America,” he said. “And to compromise that mission compromises the promise for the state.”
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