Gov. John Bel Edwards on Louisiana’s fiscal crisis: ‘It’s my problem to fix’

By Robert Mann

Near the end of his first year in office, I interviewed Gov. John Bel Edwards at the Governor’s Office. This is the transcript of that interview:

Mann: What’s the biggest adjustment you feel you’ve had from being a state rep to being governor?

Edwards: The biggest adjustment is that I went from being one of 144 legislators; one of 105 in the House, to being the one and only governor. But it’s an adjustment that I wanted to make. In fact, it was the entire reason that I ran. I became very dissatisfied with the way things were going in Louisiana and the decisions that were being made. Even as the Democratic caucus leader in the House, I felt like my influence to try to temper those bad decisions was minimal. The adjustment is once you’re the guy, you’re the guy.

Then, maintaining the relationships with individuals that I had in the House and the Senate in order to effectuate the policies that I was promoting, that was probably more challenging than I thought it would be. And, maybe I didn’t do as good a job as I should have communicating or working with individual members of legislature. Or, maybe it’s because there’s just more partisanship now than even there was before. The eight years immediately before becoming governor I was in the House. I will tell you it seems to be more partisan now than it seems to be.

That may just be a consequence of me being a Democratic governor in a state — in fact the only Democratic governor in the deep South — with a Republican legislature. There are probably more members of the Legislature who are motivated by pretty strict partisanship as opposed to other things. Bob, I will tell you, I still think that’s a minority of members. It’s not a majority in either the House or the Senate, but it is something that makes it much harder to do what I think needs to be done. Having said that, we’ve had an awful lot of success as well even working within that arrangement.

Mann: I assume you follow what’s going on in North Carolina. Are you worried that we could be inching our way to something that drastic? What’s the difference between us and North Carolina when it comes to that kind of partisan breakdown?

Edwards: First of all, it’s unfortunate because I lived in North Carolina for three years. The people of North Carolina are not that overwhelmingly conservative or Republican. I think an objective look at North Carolina will reveal very political gerrymandering of legislative districts. For example, it is a battleground state in presidential elections, but it has super majorities of Republicans in the House and the Senate and recently when the attorney general, Democrat [Roy] Cooper, beat Gov. [Pat] McCrory, you saw the legislature call a special session and actually make wholesale changes to the balance of powers between the legislature and the governor all to disfavor the governor and empower the legislature in response to a Democrat being elected governor.

That’s a sad commentary. We are not, in my estimation, in that same situation here in Louisiana. We didn’t see anything quite like that and for good reason. We shouldn’t. North Carolina, for many, many years was a very progressive forward looking state, especially related to funding higher education and research and what that has meant to that state. In fact, for a long time it was a state that other states, especially in the South wanted to emulate. That really isn’t the case anymore because if you look at the direction that it’s gone in over the last several years, the things that made North Carolina stand out really have eroded.

Mann: What’s fundamentally different about our state. Is it just that we have a bipartisan tradition in our legislature?

Edwards: Well, we do. The bipartisan tradition is paying dividends although it’s less bipartisan than it used to be and than we probably want it to be. During Gov. Jindal’s first term, for example, you had a Republican governor, you had Democratic majorities in the House and the Senate, the House a Republican speaker, the Senate had a Democratic president. That is going be hard to do anymore because I think what you’re seeing is more members of the Legislature who are just absolutely committed to gaining and maintaining whatever partisan advantage that they can rather than maintaining the bipartisan traditions that I think have served us well and I hope will continue to serve us well.

My goal is to work on a very bipartisan basis, but there’s growing concern, not just from me, but from a lot of folks that there’s too much partisanship in Louisiana. We are not Washington, D.C., and I don’t think we’re North Carolina or a lot of other states and I’m gonna do what I can as governor to make sure we don’t get there.

Mann: More specifically, what do you see yourself as being able to do? How do you govern as a bipartisan leader?

Edwards: Well, first it’s being honest and transparent. Nothing’s more important in the state of Louisiana than the budget that comes from the governor. If you would just look at the budget document that we gave to the legislature in 2016, it was the most honest and straightforward executive budget that I know anything about. I can tell you — I think even my harshest critics will tell you — that it was an honest budget. But if you don’t start there, you can’t have an honest conversation about it and then hopefully produce compromise.

It’s being honest, being transparent, working very, very had to be accessible and to meet with folks. You’ve got to sit down and talk to people and it’s probably more important that you talk to the people with whom you disagree the most and not just always with your friends. I cannot tell you the hours that I spent meeting with people who had different ideas about what was best for Louisiana over those three legislative sessions and beyond it, but that’s the only approach that I know to take to try to bridge the divide and bring people together and we’re gonna continue to do that.

Mann: I remember once, this was before you even announced you were running for governor, I was guesting hosting the Jim Engster Show and I asked you when the last time you spoke to Bobby Jindal was and you didn’t have an answer because you couldn’t remember. I wonder what your policy is for responding to outreach from legislator’s phone calls, that kind of thing?

Edwards: First of all, they all have my cellphone. There is not a single one that doesn’t and they don’t all use it, but when they do, I call them back. Some prefer to go through the office here, which I appreciate that, too because I can’t always answer my cellphone. I would be surprised if any legislator told you that I was inaccessible. That doesn’t mean that they’re always happy with what I tell them at the end of the day because when you have so many budgetary constraints that are not just on your operating budget, but when you have a capital outlay program where you have tremendous problems in terms of what your bonding capacity is relative to the size of the program and what the cash flow problems are within your construction program, you just cannot tell everybody what they want to hear.

It has been a very challenging year, but I believe people will tell you that we have been principled, we’ve been consistent, we’ve been honest with people and transparent about what we’re doing. We do our dead-level best to communicate. As difficult as the year has been and while I wish we had been more successful in some things, without that approach, I think we would have been a lot less successful than we have been.

Mann: What are you most satisfied with this year when you look back? What do you feel is the accomplishment that you really hang your hat on?

Edwards: Well, the one policy change that I am most satisfied with has to be the Medicaid expansion. As we sit here towards the end of 2016, we have 363,000 working poor people in Louisiana with health coverage that didn’t have it as recently as June of this year. We are saving $184 million state general fund. That is almost 10 percent of the budget deficit, was addressed through savings by simply availing ourselves of our own federal tax dollars. We have providers out there whose bottom lines are much better than they were because they are now being compensated for care that previously was uncompensated, but most importantly we are saving lives, not just dollars and we have about 100 individuals in the state of Louisiana right now who are being treated for cancer that they did not know they had until they had Medicaid expansion and access to diagnostic evaluations.

That’s about half breast cancer and half colon cancer, but we have thousands of people who had access to diagnostic evaluations where hundreds are being diagnosed with diabetes and didn’t know they had it. Hypertension, which is a huge problem in Louisiana and, as you know Bob, the earlier you can diagnose someone, the more effective the treatment and also the cheaper the treatment. You keep people more productive, you keep them in the workforce. For every imaginable reason, it has been a tremendous success in Louisiana. While I somewhat understand the concept behind repeal and replace [of the Affordable Care Act], I do hope they don’t replace the Medicaid expansion because that part is working. But if they do, that they give us some reasonable facsimile of what we have or the flexibility to maintain what we have.

Mann: Have you looked at the [health care reform bill proposed by U.S. Sen. Bill Cassidy]?


Edwards: I have looked at some of it and by the way, Senator Cassidy does a great job of working with me and communicating and making sure that I have some appreciation for what his ideas are. There are some things that I think will be very, very helpful. I like, for example, the idea of tax credits, health savings accounts, but the fact of the matter is for working poor people, they don’t save money because they’re living hand to mouth. A health savings account is not going to make that available to them and for the same reason I don’t think tax credits will do it either.

I’m very hopeful that when he sees — I know his heart. He was a physician at Charity Hospital here in Baton Rouge, Earl K. Long. We’re sharing him with the information that I gave you a while ago. When he sees how helpful this has been in improving people’s lives, I really believe that he will help us to preserve as much of it as he can. There’s some things in his plan that I think are very, very helpful, but I don’t believe that they are an adequate replacement for the Medicaid expansion.

Mann: My doctor friends, [the] specialists — and I think that’s maybe particular to specialists — but they all complain about not being able to be adequately reimbursed for their time or treatment [by Medicaid]. Is that one aspect of Medicaid expansion that is troublesome — that you can get them primary care, but can you get them the specialized care?

Edwards: Well, you’ve got to do both, and provider rates are a problem in the Medicaid system, both the traditional Medicaid population and the expansion population, but there are ways to address that. We’re saving $184 million state general fund on the Medicaid expansion and we could use some of that savings to increase those provider rates, given the overall budgetary pressure that we have in Louisiana right now. It’s hard to do that and you’ve got to convince the Legislature to do that, but there are ways to increase provider rates in the Medicaid program. By the way, to be successful — you have to because success for me isn’t expanding coverage — it’s delivering better health outcomes. You’ve got to make sure people have access to primary care and to specialty care when it’s warranted.

That doesn’t happen if your primary care physicians or your specialists aren’t seeing Medicaid patients. We really want to and had a plan to increase provider rates. We’ve actually increased 7 percent the rates that we’re paying hospitals in the Medicaid program to make sure that we’re successful there. The Medicaid expansion is very positive because almost every specialist that you’re talking to has hospital privileges. The hospitals that they work for are in much better shape than they were before Medicaid expansion. It’s not perfect. We don’t have it all figured out, but we’re in a much better place today than we were before expansion and we still have challenges that we have to deal with and one of those is increasing those provider rates.

Mann: I was telling some of your staff outside while we were waiting about just some conversations I had [with parents of high school students].  It really hit me, the despair that they have over the future of higher ed in the state in the sense that I’ve not heard before from these people. They can afford to send their kids [to college], but it’s not only about money now. It’s about this sense that higher ed is just going down the drain in this state and it just doesn’t have a future. Do you sense that and are we on a precipice here?

Edwards: I don’t share the pessimism, but I understand it because for eight years we disinvested in higher education in terms of state general funds support more than any other state in the nation. And the tuition increases over the same time period in Louisiana were the highest of all the states in our country. For example, you were talking about LSU. You have LSU our Land Grant institution, the flagship for Louisiana that, quite frankly, has been challenged in ways that are not helpful and it does have to do with money. Now, money isn’t the answer to everything, but you can’t pretend that you can always do more with less.

I always took great umbrage at that saying because it’s a fiction and I like to say that if you can always do more with less, one day you can do everything for nothing. Well, clearly you can’t, but higher education is so critically important to the future of our state that we better start investing in it. That’s why I’m trying very hard to get legislators and other people to stop focusing on new and better ways to cut and focus on doing better ways to invest. Nothing is more important for the future of our state than education and higher education has been cut. We haven’t been exactly doing tremendously well by our K-12 schools, but because it’s protected in the constitution through MFP [Minimum Foundation Fund], you haven’t actually seen cuts, but we have done that to higher ed and we’ve put a tremendous amount of pressure and the ability to attract and retain both the best faculty and the best students is compromised when you take that approach year, after year, after year.

If you’re a great professor at the University of Iowa and you’re looking across the country at opportunities, you maybe less inclined to think there’s an opportunity in Louisiana when you see what we’ve done. When you couple that with the stingiest pension benefits in the nation under the Optional Retirement Plan for higher education faculty members, it is very hard for our university presidents and for the deans of our colleges to go out and recruit. None of that bodes well for our future, but I believe we can and will turn it around. The hardest thing about being governor when you have all these budget problems is it’s gonna take me longer to do the things that I wanted to do. Nothing I just told you is any different than I said when I was running for governor.

Now, I will tell you this: If you look at the budget that we put into place on July 1st of this year, state general fund support to higher education was stable. The tuition increases in Louisiana were the lowest in a decade. That reflects a tremendous commitment on my part; working with the Legislature to turn a corner as it relates to our support for higher education, because the backdrop for stabilizing state support for higher education in my first year is that $2 billion deficit. The biggest any governor has ever faced in the state of Louisiana and yet we stabilized funding for higher education, so the commitment is there. I believe we can work with the Legislature to do it, but the more budgetary pressure you have overall, the harder it is to do which is why we have to get to a revenue structure that produces revenue in a manner that is fair, predictable, stable, and sufficient. I never forget to leave off the word sufficient because there’s certain things we just have to do. Higher education is one of them.

Mann: I’ll start wrapping up because I know you’ve got to get on to your other meetings, but what are the stakes this year? If the Legislature’s not able to right this revenue ship, what happens?

Edwards: Well, first of all, it would be tremendously painful destabilizing for the state of Louisiana, because about two thirds of the revenue that was raised in the sessions this year will fall off the books come July 1, 2018. We need to use this fiscal session, which is what the legislative leadership told me they wanted to do. They didn’t want it in that comprehensive long-term tax reform in 2016. They wanted to do it in the fiscal session in ’17, with the benefit of a task force report that they now have, so that we can do tax reform that is effective come January 1, 2018. And we don’t have that tremendous fall off in revenue that would further destabilize the entire state and render us unable to house inmates, deliver healthcare, educate our kids, build roads. You name it. We wouldn’t be able to do it. What we do, starting in this session in April, is going to be critically important, but when we’re successful, we’re going to stabilize our state for many, many years to come.
 
That’s what I look forward to. It’s going to be a challenge because there are different ideas about how much revenue you need and what’s the right way to raise it and whether you need to raise any. I think most reasonable thinking people know that it is not true as some say that we don’t have a revenue problem. We do have a revenue problem and we should always try to spend in ways that are smarter, where we root out waste, fraud and abuse that we achieve savings everywhere that we can. Bob, the truth is we ought to be doing those things even when we’re running surpluses. We should, but we can’t delude ourselves into thinking that we can withstand huge cuts and still have the state that we want to have that affords people opportunity for a better life because we won’t.

Mann: Last question. Right now, I think the fact we’ve got this revenue problem, which I think really hurt Bobby Jindal’s job approval rating, is still seen by most people in the state as this big mess that Jindal left in your lap. Are you worried and when does that become John Bel Edwards’ mess?

Edwards: Well, it’s my problem to fix because I’m the governor, but it was the largest budget deficit in the history of our state that I inherited from my predecessor whose budgeting practices were terribly irresponsible. Last year, the reason we had our problems, there were more than $800 million in one-time revenue lined up against recurring expenditures. All the one time money was gone. Those funds had been swept. Those dollars were not available. There was no Medicaid utilization increase budgeted for the first time since the Medicaid program was created. They made 11 Medicaid vendor payments, leaving me to budget for 13, then you put on top of that the oil prices and that accounts for almost all of that $2 billion problem. It is something I inherited. It is my responsibility to fix it, but the people of Louisiana fully understand I didn’t create the problem. Now, they may not like my prescription, but the diagnosis is obvious to everybody. We really have to fix the problem more than fix the blame. Everybody knows, I say everybody, the overwhelming majority of people know how we got where we are, but the most important thing is getting to a better place and that’s what I’m working on everyday.

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