[StBernard] Treasury Update

Westley Annis Westley at da-parish.com
Thu Aug 6 19:06:28 EDT 2009


Treasury Update

August 06, 2009


Inside This Issue



* . In the News...
* . The State's Budget
* . Reduce State Government Workforce
* . Accounts Receivable
* . Conclusion



In the News...


Daily Iberian -- Kennedy: Don't raise taxes
<http://www.iberianet.com/articles/2009/07/31/news/doc4a71ebc8469c1568786498
.txt>


Alexandria Town Talk -- Kennedy says La. should buckle down, not raise taxes
<http://www.thetowntalk.com/article/20090710/NEWS01/907100328/Kennedy-says-L
a.-should-buckle-down--not-raise-taxes>
Top


The State's Budget


The single most important bill the Legislature votes on every year,
not just in terms of fiscal or economic policy, but also social policy is
the state's operating budget or HB 1. Last year's budget was $29.6 billion,
and this year's budget is $29 billion after cuts you have probably read
about.

Whether you're talking about $29.6 billion (last year's budget) or $29
billion (this year's budget, which the legislature just passed), these are
huge numbers and even larger when you look at the budget in a historical
context. In 1996, the state's budget was $11.9 billion; in 2005 (the year
of Katrina and Rita), it was $18.7 billion. We are now at $29 billion.
Going from $11.9 billion to $29 billion is a pretty dramatic increase,
especially considering that total inflation over that time was only 37%,
which only accounts for $4 billion to $5 billion of the increase.

The bottom line is Louisiana has a spending problem and ranks 9th in state
spending per capita. You might be surprised to learn that a huge amount of
spending is for the state's labor force. The state spends more than $4
billion a year on base salaries alone, and Louisiana leads the south with
around 104,000 state employees.


Top


Reduce State Government Workforce


To get control of Louisiana's budget, we must reduce labor costs.
We can reduce the state's workforce without firing anyone or laying anyone
off by simply not filling vacancies. We could save between $40 million and
$50 million in base salaries for every 1,000 vacancies not filled. We could
start by setting a goal of not filling 5,000 vacancies a year for each of
the next three years. By doing so, it would result in $600 million to $750
million in savings.

This must be done strategically and not arbitrarily, however. All jobs are
not the same in terms of importance. State agencies will need to reorganize
and address layers of management and managerial spans of control.



Top


Accounts Receivable


Another way to get a better handle on the state's budget is to
collect the money that is owed to us. In the most recent State of Louisiana
Receivables Report prepared by the Division of Administration for the
quarter ending June 30, 2008, $1.1 billion in accounts receivable is
reported as being more than 180 days past due. Not 30 days. Not 90 days.
180 days. The total amount of receivables owed the state is $1.7 billion,
so 65 percent of all money currently owed to the state is six months past
due.

Examples of uncollected receivables include various fees and licenses such
as university and health care bills that have not been paid. The state must
go after all of this money, collect as much of it as we can, and end the
practice of allowing such a large amount of receivables to go uncollected.
Louisiana wouldn't have had to deal with many of the budget problems we
faced this past legislative session if we aggressively pursued our
uncollected debts.



Top


Conclusion


The state must start to live within its means. Louisiana has more
than sufficient monies to deliver services to residents but we must
prioritize spending, reduce the state government workforce, do a better job
of managing the money we already have, and collect the money that is owed to
us. If a private company operated its business the way the state is running
things now, it wouldn't be in business for very long.

Top

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