Tuesday, October 04, 2005

Consequences

News reports are beginning to reflect the magnitude of the reality check Louisiana now faces. None of the following is really new aside from the hurricane context: The NYT reports Louisiana may lose population and a congressional seat as a result of Katrina and Rita. But as the state demographer quoted in the article acknowledges, "We have not shown a positive net migration in many years." The reasons for that are well-understood. Among them: a stagnant economy and a failed public school system. Gannett News Service reports the state is seeking federal assistance to cover local and parish payrolls for up to 3 years in order to provide necessary public services. Governor Blanco said, "We need to allow federal aid money to cover more than merely overtime for public employees" and the article suggests that may be for up to 3 years. Of course, the receipt of federal money for public payrolls -- if approved at all -- will likely be accompanied by scrutiny of those payrolls. Are those payrolls up to it? The statewide trend of increased public employees (despite outmigration -- see above) is unlikely to go unnoticed. Obviously public services must be provided and the money for that must come from somewhere. But asking U.S. taxpayers to sustain more of Louisiana's business-as-usual isn't likely to go over well in the long-run (or at least for the next 3 years). There's more of the same from last week's Associated Press report about Louisiana's post-hurricane budget picture. It isn't pretty:

The state is forecast to permanently lose as many as 125,000 jobs... More than a third of the state's residents live in areas hit by the two hurricanes and 37 percent of the state's jobs are located there... 81,000 businesses [are] closed or at least displaced — 41 percent of Louisiana's companies and... up to 325,000 jobs will be temporarily lost.
The message from the AP report is that Louisiana can no longer generate the income it has relied upon to feed its growing state budget -- up more than $1 billion just last year. In other words, Louisiana can't sustain the way it's been doing business. Maybe if business taxes had been fully eliminated rather than phased out they would have been less vulnerable to the tragedies in the long term... Maybe if the state political environment had been more business-friendly there would have been more businesses in the area to begin with... The what-ifs are endless and depressing. No one could have predicted -- and certainly no one would have hoped for -- the tragedies that have befallen Louisiana in the last month. But sometimes a crisis presents opportunities for positive change. Hurricane fallout is simply accelerating problems that were already well underway (but almost completely unaddressed) in Louisiana before the 2005 hurricane season. Until Katrina, Louisiana had somehow always managed to kick the can down the road. But corrupt, bloated and ineffective government ultimately has consequences. And now, Louisiana is reaping what is has sown.