FOR IMMEDIATE RELEASE

March 5, 2008

Contact: Michael DiResto, 225-342-7158

Commissioner Davis stresses budget reforms before House committee

Baton Rouge – At a briefing for the Louisiana House Appropriations Committee today, Commissioner of Administration Angele Davis opened her presentation by stressing major reforms implemented during the budget development process.

Last Friday, Commissioner Davis presented Gov. Bobby Jindals’ Executive Budget proposal for FY 2008-2009 to the Joint Legislative Committee on the Budget. The $30.1 billion total budget recommendation for FY ’08-09 represents a 12.26 percent decrease from current year budgeted figures, but includes a 3.17 percent increase of total state funds over the same time period.

Commissioner Davis’ opening statement:

“In terms of policy, this Executive Budget marks a stark departure from the status quo. In fact, even though this administration had just a month and a half to develop this Executive Budget, our main mission during the budget development process was to make key policy shifts to confront the status quo and pave the way for long-term improved outcomes. Sothis budget is a first step toward putting in placereal reformsthat will have positive impact down the road. They will, of course, take time to bear fruit.

The status quo

“The status quo as I discovered it at the beginning of the budget development process was this: A gradually increasing state reliance on one-time revenues for recurring expenses that reached an alarming and historic height in the current budget of $800 million. A situation only likely to get worse if not aggressively addressed. That $800 million ‘hole’ in the budget, combined with constitutional and other mandated spending increases, meant that more than $1.135 billion in increased funding challenges had to be addressed in front of any other budget issues.

“Another status quo issue was getting a handle on the number of state government positions – and recommending reductions in such a way that the proposed cuts are not just window dressing but are lasting and difficult to counteract down the road.

“Let me give greater context and emphasis of two major policy reforms:

Historic cut in reliance of one-time revenue for recurring expenditures

“First,I've pulled some historical information on the use of one-time revenuefor recurring expenditures, and the reduction from the current year level of $800 million tothis executive budget’s recommendation of $420 million will bring us to the lowest level since FY 2004. During the Foster years, the figure ranged between $100 million and $250 million. But from FY 2003 it gradually rose from about $200 million to the $800 million in FY 2008. Reversing this trend is not easy, because it means you have to plug that hole in the budget. So, from a historical perspective, because the $800 million figure was so high, this $380 million one-year reduction in the reliance on one-time dollars, a reductionof 47.5 percent, is simply historic.

“I know citizens understand, just from their household expenses, why it's a good idea to have all your recurring expenses aligned with recurring income. They deserve a government that has the same common-sense understanding. But it’s also important because without a policy of trying to reduce this reliance and get back to a match, budgets cannot be looked at realistically. Using one-time money for recurring expenditures creates an unrealistic sense of what it takes to maintain certain services and policies over time. And it's better to review those policies in realistic terms. We have taken bold steps in this Executive Budget to match one-time dollars to one-time expenditures, and we will be developing other policies in the future to reduce this unhealthy reliance even more.

Lasting reductions in state positions that maintain levels of service

“Second, we eliminated 1,465 state governmentpositions, all vacancies. 149positions were added in strategic areas for a net of 1,316 reduced positions. We also brought 259 Higher Ed positions back on budget (so these were neither eliminated nor created positions) for an overall net reduction of 1,057 budgeted positions. On the surface these figures are not terribly out of the ordinary. But what is different is how we eliminated positions. For the first time, we eliminated positions based on the 5.5-year historical vacancy average. Because of this, we have much stronger basis for trying to make sure these positions are not simply added back in the future. It will be a hard argument to make to suggest cutting these positions threatens levels of service when nobody has been in these positions providing service for years. In fact, my policy here was developed precisely with the goal of achieving position reductions that allow continuing levels of service to be maintained.

“And these are just two of the reforms we implemented. Others include:

  • No new or expanded programs outside of strategic and critical areas of need
  • Advanced transparency and accountability in government
  • Initiated performance audits across state government
  • Eliminated and consolidated offices

“Members of the committee, this is a reform budget with changes designed to control the growth of government in coming years and to make strategic investments that build a stronger Louisiana.”