Louisiana State Executive Budget Main Page



February 12, 1999




Presented, herewith, is my budget recommendation for the fiscal year beginning July 1, 1999. It has been prepared in accordance with the Constitution and applicable statutes and provides financial and program information to assist you in making informed decisions as you consider appropriations for the coming year. In accordance with Article VII, Section 11 of the Constitution, I will prepare the original general appropriation bill in conformity with this document.

Over the past three years, we have worked effectively together to develop what I like to call Ainvestment budgets@ rather than Aexpenditure budgets.@ Instead of merely budgeting the same amount as we did in prior years to cover the cost of operating government, we are starting with our priorities -- especially education and infrastructure projects -- and investing in those areas that give state taxpayers the strongest return. My budget for the fiscal year 1999-2000 follows that philosophy again.

Projected revenues for the next year are not as strong as we have seen over the past three years. Revenue growth is down to less than 1 percent as a result of depressed prices in the oil industry. That slow growth combined with revenue decreases associated with the phasing out of video poker in 32 parishes and the phasing out of the inheritance tax and along with mandatory expenditure increases associated with the implementation of Atruth in sentencing laws@ for state prisoners and a 27th pay day make 1999-2000 a difficult budget year.

But these challenges must not cause us to lose our focus or forget our priorities. Too often in Louisiana=s history, when we faced difficult budget challenges, we chose to cut those items that were most important and should have been our highest priorities. In particular, we let our investments in education and infrastructure fall by the wayside and instead adopted budgets that prioritized the continuing operations of government agencies.

That is not my philosophy. In fact, when it became apparent that revenue growth would not match our expectations during the current year, I instituted a mandatory freeze on hiring and travel in order to make sure we did not experience budgetary shortfalls that would require us to make reductions in our education investments. This budget maintains my commitments to investing in education and infrastructure even in the face of difficult budgetary challenges. We simply must take care of our priorities with our first dollars, not our last.

The Louisiana Economic Development Council=s recently-issued AVision 2020" report underscores why this philosophy of investment budgeting and strategic planning is so important. If we are truly going to change Louisiana and move from our position as a state mired in poverty and at the bottom of the competitive rankings among states, we need to make careful and strategic choices. We will not be able to spend our way out of poverty as we don=t have the resources to do this. We must instead invest in the education and skills development of our citizens and provide the infrastructure our businesses need to grow.

Vision 2020 calls for state government to make strategic investments in education and infrastructure and to target those investments carefully to ensure a strong return. Our school accountability program holds great promise, but will only succeed if its initiatives are properly funded. Our higher education institutions can play a far more vital role in economic development through the commercialization of their research, but we must target our limited resources to those technology clusters that have the greatest chance of success. Our community and technical college system can provide the trained workforce sought by businesses across our state, but they will need the faculty and equipment to produce workers with the skills needed for today=s technology-intensive jobs. Our businesses can prosper and grow, but only if our roads, ports, and airports offer them the ability to take their products to market quickly and safely. We need to make sure that the new digital infrastructure reaches businesses and citizens in all corners of the state as well, and that we continue to support our burgeoning tourism industry through investments in parks and recreation areas, and the arts, music, and folklife programs that promote Louisiana=s unique cultural heritage.

Because I feel so strongly about the goals of Vision 2020 and want to see us institutionalize the type of strategic management of state government that it calls for, I have used it as a blueprint for developing my executive budget. We can realize the Council=s vision of making Louisiana one of the top ten states in which to live, work, visit, and do business by the year 2020 if we make the type of investments called for in that plan. My commitment to seeing this effort succeed is reflected in the following investments which are included in my executive budget:

That we have been able to find the revenues necessary to fund these new initiatives and maintain funding for the other programs listed above is a testament to our resolve to see Vision 2020 implemented. When you consider that the amount by which continuation general fund expenditures exceeded the official revenue forecast for next year was about $320 million, it is clear these commitments represent our top priorities.

How does this budget close that $320 million gap in view of the Vision 2020 expenditures outlined above? First, we saved about $100 million by not funding inflation and merit increases once again this year, in addition to not providing a general fund increase in our risk management self-insurance program. We also asked agencies to absorb the $44 million cost of the 27th pay day along with a $7 million increase in our state employees group benefits program. It was also necessary to curtail Medicaid expenditures for a savings of $66 million from continuation to bring the budget into balance.

Other sources of funds are required to ensure that deeper cuts, especially in Medicaid, are not necessary. We must, by law prepare this budget 5 months before the next fiscal year begins. This allows a significant amount of time for us to work with the House and Senate leadership to firmly establish these sources. While it is possible, for example, that the Revenue Estimating Conference will be able to raise the revenue estimate, we certainly can=t count on it at this time. Therefore, I have identified two possible additional revenue sources in this document. My proposed budget associates certain recommendations with anticipated revenues from the New Orleans casino scheduled to open in October, 1999 and with a small portion of the revenue Louisiana is expected to receive as a result of the Master Settlement with major tobacco manufacturers. These supplementary recommendations are clearly detailed elsewhere in this document, but involve funding for the base Medicaid program ($68 million), an additional 800 Medicaid Waiver slots for the developmentally disabled ($4 million), and the cancer research program at the LSU Medical Center ($5 million) highlighted above. I will propose an amendment to the casino law to allow the use of 2/3 of the revenue associated with it for Medicaid funding ($44.7 million of the $67 million in expected collections). Under the terms of the tobacco settlement, Louisiana could receive as much as $199 million between now and the end of Fiscal Year 1999-2000. I am proposing the use of $32.7 million of these funds for base Medicaid ($23.7 million), the waiver slots, and cancer research. If it is determined either or both these sources are not secure enough, I will work with you to find sources that are.

I hope I have successfully provided you with a broad overview of my budget recommendations and that you agree that they put Louisiana on the road to achieving Vision 2020. My administration looks forward to working with you as you consider this budget and joining you in our effort to move Louisiana forward.



Louisiana State Executive Budget Main Page