Louisiana is facing a fiscal cliff of $1 billion next July, and Gov. John Bel Edwards has been pushing for tax increases — but the House is demanding spending reductions instead. As a result, the governor has hit the road promoting the nonpartisan task force recommendations about taxes (as he “embraces most, but not all, of the recommendations”) and is seeking the support of the business community to help him convince Legislators that increased tax revenues is the solution to the fiscal cliff.
However, a reading of the task force report shows that recommendations were also made concerning spending, and that the “recommendations should be considered as a package ... and not individually in isolation,” and that there should be “better long-term planning.” The reports very first recommendation is titled “Budget and Spending Recommendations,” and says, “The state should consider establishing a formal multi-year spending forecast for such things as Medicaid.” Is this the recommendation not embraced by the governor?
Louisiana’s annual Medicaid cost has almost doubled in the last nine years, increasing from $1.7 billion in 2007 to $3.3 billion per year — and is the primary cause for our $1 billion deficit. Furthermore, a recent study by the Kaiser Family Foundation reported that Medicaid expenditures are projected to increase 184 percent over the next 10 years — which indicates the state’s annual Medicaid cost may grow another $2.8 billion to $6.1 billion by 2026.
Perhaps the governor should embrace all of the task force recommendations as instructed — and prepare a 10-year Medicaid spending forecast. Before we increase taxes or cut spending on education, Louisiana taxpayers and university presidents need to know why we can’t cut Medicaid spending (i.e. on able-bodied adults with no dependents who have chosen to not work).
Steve Gardes is a certified public accountant (CPA) and certified valuation analyst (CVA) with over 40 years of public accounting experience.