By Robert Mann
Have you noticed how politicians often compare government work to running a household or small business, especially when revenue declines? “If our families or small businesses begin to run a deficit, we don’t have many choices,” former state Rep. Mike Johnson, R-Bossier City, (now a member of Congress) wrote last year about Louisiana’s chronic budget shortfall. “We tighten our belts, cut unnecessary expenses, and make whatever changes are necessary to balance our budgets.”
It’s as if dealing with money problems in either endeavor — business or your family — is nothing more than making a few painful-but-obvious decisions.
That’s the simplistic approach state Rep. Lance Harris, the Republican House leader from Pineville, takes toward the $304 million mid-year budget shortfall he and other lawmakers will address in a special legislative session Gov. John Bel Edwards plans for February.
On Jan. 19, Harris released a one-page document he portrayed as a plan to eliminate the need for a special session to prevent deep cuts to healthcare and education. “If this were my business,” Harris tweeted, “this is how I would solve the mid-year deficit.”
And what is the Harris plan? A cut of 8.12 percent (and, in a few cases, 4 percent) applied across the board to almost every state government department. Those spared cuts in Harris’ “plan” include higher education, Veterans Affairs, Social Services and retirement. Those not spared include the state’s public-private hospitals, prisons and public schools.
What Harris portrays as a plan is using a budgetary meat cleaver to hack away set percentages from the targeted department, regardless of its mission or the vital services it provides. Despite his invocation of shrewd business acumen, Harris’ approach — indiscriminate cuts — is not what a smart business leader would do.
A CPA friend of mine, who advises businesses on budgeting and strategic planning, observed that an across-the-board cut to fix a business revenue shortfall is often the wrong approach. “You might be ignoring things that need to be cut by 100 percent,” the CPA told me, “and there are things that you might need to increase to help you make your business run more efficiently.”
For example, one might spend more on document management software to achieve net cuts by eliminating more costly photocopies. Cutting software and photocopies by the same amount might reduce spending but could damage the business. A more creative approach might yield real savings and a more efficient operation.
An effective business owner wouldn’t look only for spending cuts, but also smart ways to increase revenue. You might double down on advertising or hire additional sales staff to increase profits. Some businesses also might adjust their prices to account for inflation or lagging demand. And if the company had cash reserves — analogous to the state’s Rainy Day Fund — you might dip into it to get through hard times.
That’s the savvy budgeting and management practices we expect from our political leaders and that is lacking from Harris and his Republican caucus.
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