FOR IMMEDIATE RELEASE
June 25, 2008
Contact: Michael DiResto, 225-342-7000

Commissioner Davis: Session saw significant fiscal reforms

Baton Rouge - Commissioner of Administration Angele Davis released the following statement today assessing the state's fiscal status and the impact of reforms undertaken during the regular legislative session:

'We worked with the legislature to pass a first budget that was fiscally responsible, with total funding of $29.7 billion for the next fiscal year that is $4.6 billion less than the existing operating budget of $34.3 billion - a 13 percent reduction. While this reduction did reflect a loss of federal dollars, losing those dollars also required using state money to cover critical social and health care services.'

'We completely eliminated, for the first time in history, the state's long-held, unhealthy habit of relying on 'one-time' revenue to cover recurring expenditures. Eliminating the current year's $800 million reliance on one-time money also represents the largest year-to-year reduction in Louisiana's history. We have cut up that credit card, kicked that unhealthy habit, and we are addressing the state's ongoing expenses in an honest, straight-forward manner.

'Where state spending did rise, it was largely the result of plugging that $800 million (mostly in health care expenses) back into the budget, and addressing important education goals through a $90 million automatic increase in public school funding, $56 million more for a teacher pay raise and $35 million for higher education, to keep both at the southern average.

'This fiscally responsible approach laid the groundwork and made it possible to balance the budget, totally eliminate the reliance on one-time money, and provide taxpayers permanent relief. Taken as a whole, that is a tremendous accomplishment, and one in which every Louisianian can take pride. This largest tax cut in Louisiana history will mean that Louisiana's taxpayers will keep $1 billion more of their hard-earned money over the next five years alone, to help grow their dreams and help grow Louisiana's economy. But it also means there will be one billion fewer dollars available to grow government.

'We eliminated two government offices and consolidated six others.'

'The Governor issued strict criteria for use of state tax dollars toward new legislative 'earmarks' for Non-Governmental Organizations, to safeguard transparency, accountability, and so that state taxpayer dollars will be used for true state priorities.'

'While protecting the budgetary bottom line, we also were able to target investments toward important strategic and critical needs':

- Along with teacher pay and higher education funding increases, provided $10 million for student scholarships; $10 million for teacher flexible pay; $12.6 million for literacy and numeracy initiative; $8.5 million for the Recovery School District extended day program; and $1.8 million through the MFP to create two new charter schools

- In healthcare: $10 million more to expand LaCHIP; $13.8 more to address mental health crisis

- For workforce development: Devoted $10 million for workforce training through LCTCS, $4.5 million for career technical education, and $3 million for Quickstart Training

- For future economic development opportunities, invested $40 million in the Rapid Response Fund and put aside $307 million more in the Economic Development Mega-Fund

- Invested additional $7.5 million toward juvenile justice reform and $6.5 million for a new 50-member state police manpower class

'These strategic investments, coupled with policy reforms, are aimed at enhancing the quality of life of the citizens of this state, and we will be monitoring their performance to make sure they are getting results. With the completion of all budget bills, we still left in place a budget excess of $639 million – money that will become surplus to be used to address important long-standing liabilities of the state.'

'In Capital Outlay, or the state's capital construction budget, the Governor responded to a monumental $1.465 billion backlog in Priority 5 non-cash obligations by doing something sensible, but unprecedented: Adding no new projects and no new Priority 5 spending.

'Acknowledging that the problems in the Capital Outlay process stem from an overloading in the budget of local projects in excess of borrowing capacity, we passed real reform that consisted of

1) Requiring spending restraint by limiting funding of non-state projects to no more than 25 percent of cash line of credit capacity and requiring 25 percent local match for non-state projects; and

2) Increasing the quality of projects funded through the program by establishing objective criteria for feasibility studies for all projects, to make sure they are necessary, practical, cost-effective, and self-sustaining. We reached compromise with legislators to give them more involvement on non-state project recommendations, but we held the line on across-the-board feasibility analysis, a cornerstone to reform. As a result, I believe these reforms will bring much-needed accountability and spending restraint to the process, and improve the quality of taxpayer-financed state construction projects, which is the truest test of capital outlay reform.

'Overall, this session saw significant strides in fiscal reform.'