Louisiana Treasurer Criticizes Governor, Legislature Over Budget

DALLAS — Louisiana Treasurer John Kennedy criticized the Legislature and Gov. Bobby Jindal on Monday for developing what he called a precariously balanced fiscal 2011 budget that doesn’t come to grips with the state’s tenuous fiscal situation.

Kennedy said lawmakers were “breathtakingly reckless” in balancing the $26 billion budget with $198 million from the Budget Stabilization Fund, $242 million from a one-time tax amnesty program, $17 million from a settlement with a pharmaceutical company, and $1.5 billion of federal stimulus funds that won’t be available next year.

“We have managed to make the United States Congress look fiscally responsible, and I didn’t think it was possible,” Kennedy said in his presentation to the Press Club of Baton Rouge. “This budget is precariously balanced using a patchwork of one-time pots of money.”

Jindal’s veto on Friday of a portion of the budget bill that would have provided local governments with $24.9 million from the state’s Oil Spill Contingency Fund was wrong, Kennedy said.

The money would have reimbursed 11 coastal parishes and two towns for their expenses in responding to the oil gushing into the Gulf of Mexico from the BP well blowout.

The oil spill fund was financed from BP’s grants to the state since the blowout on April 20.

“I would not have done it,” Kennedy said. “The proposal would not have taken the pressure off BP but off our colleagues in local government.”

Local governments will face additional problems as their tax revenues are diminished by the deepwater drilling moratorium and the continuing closing of commercial and sport fishing areas due to oil contamination, Kennedy said.

“I worry about their bonded indebtedness,” the treasurer said.

In an interview on Tuesday, Kennedy said he is concerned about local governments’ cash flow.

“It’s really larger than just their bonds,” he said. “One thing we learned from Hurricane Katrina is that local governments experience cash-flow problems after a disaster.

“These local governments rely on property and sales taxes, and they could see a 50% reduction in the sales tax revenues,” Kennedy said. “We know they are having to spend money on the oil spill that was budgeted for something else.”

Jindal said he vetoed the measure because it would have put the burden for the oil-spill containment effort onto state taxpayers rather than BP.

In any event, the governor said, the money had been allocated in May by the Joint Legislative Committee on the Budget to various state agencies for their emergency response expenses.

“We will continue to work with parishes to make sure their needs are met and that BP fulfills its responsibilities and financial commitments made to local communities,” Jindal said in his veto message.

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