Saturday, April 16, 2011

Privatization and imaginary dollars do not a budget make

Just the FAX is a newsletter sent to state legislators each Friday from the Louisiana Federation of Teachers. Issues are available online at

The holes in Governor Bobby Jindal’s proposed $24.9 billion budget are showing. We know that the budget depends too heavily on imaginary dollars and the sale of state assets—one-time cash infusions that will probably cost the state more in the long run than they gain right away.

The imaginary dollars pose a big problem for lawmakers who must adopt a balanced budget by June 23. Before that money comes available, the legislature will have to approve constitutional amendments, and voters will have to adopt them at the polls in October. Can the budget be considered “real” if its revenue sources are unclear from June to October?

The sale of state assets is also problematic. The sale of prisons, for example, might produce a temporary windfall. But history shows us that over the long haul, privatized services often cost much more than those provided by government.

Legislators should be very wary of the governor’s plan to privatize the Louisiana Office of Group Benefits. That is a well-run, scandal-free operation that provides insurance for a number of state and local public agencies, including many school systems.

The Office of Group Benefits has a $500 million accrued surplus, which makes it a tempting target for the Wall Street types who drove our economy off the cliff in 2008.

To read the rest of the article, please click here.

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