A budget deficit that suddenly materialized.
Complaints that his predecessor hid the problem.
An unappetizing set of choices to balance the budget by either cutting government benefits or raising taxes and fees — or some combination of the two.
Warnings that the government would run out of money without immediate action.
That’s the dire situation that Buddy Roemer inherited when he was elected governor in 1987.
The steps he took to stop the financial hemorrhaging in Louisiana hold lessons today, because Mayor-elect Helena Moreno is grappling with a similar situation now in New Orleans.
Like Roemer, Moreno has faced a monumental budget crisis on two levels. Not only must she solve a long-term deficit, which will take two or three years, she has had to scramble in the short term to find the money to pay employees and fulfill public contracts.
When Romer was elected in October 1987, he and his top advisers were shocked to be told the next day that the state would run out of money by the time he took office in March.
At Roemer’s behest, the outgoing governor, Edwin Edwards, took the unprecedented step of ceding control of the budget to him. Within days, Governor-elect Roemer began putting together plans to cut spending, raise taxes and borrow money to stanch the bleeding.
Moreno, shortly after being elected mayor in New Orleans last month, worked with the New Orleans City Council and state leaders to secure a $125 million loan to allow the city to pay employees and vendors. With outgoing Mayor LaToya Cantrell playing a bystander role, Moreno and the City Council approved a reduced budget for next year that includes $150 million in spending cuts to City Hall departments and once-per-pay-period furloughs for 14% of the city’s workforce, roughly 700 employees.
Roemer served as the state’s de facto leader before taking office, much as Moreno is doing in New Orleans now.
“The parallels are pretty direct,” said Steve Cochran, then a top aide to Roemer who went on to work for a variety of environmental organizations.
A sudden budget crisis
Roemer was a fourth-term congressman from Bossier City/Shreveport when he mounted a longshot campaign to knock off Edwards, who was completing his third term and running for reelection. But Edwards was weakened by corruption scandals and a sharp drop in oil prices that caused jobs and tax revenue to disappear. Two other congressmen and the secretary of state also challenged Edwards.
Roemer was running last until he caught fire late in the campaign with a straight-talking message that played well on TV, where he promised to end politics as usual, “slay the dragon” (Edwards) and undertake what he called the “Roemer Revolution.”
Roemer ran first on the night of the election. Edwards finished second and announced at 1:30 a.m. on the night of the election that he wouldn’t compete in the runoff.
Roemer was suddenly governor.
Len Sanderson, who suddenly had the responsibility of overseeing Roemer’s transition, met the next day with one of Edwards’ top aides, who said “that the state may go broke, that the state was in worse shape than they had been saying publicly.”
The governor-elect’s first decision was to determine whether he should tackle the budget problem immediately.
“A lot of the political voices said, ‘Roemer, stay out of it. It’s Edwin’s problem. He’ll own it. Don’t touch this. You didn’t do this,’” Cochran recalled. “Roemer, to his moral and political credit, said, ‘I can’t do that. We’re going to see what we can do to get involved.’”
Roemer went to Edwards and got his agreement to hire a business executive named Brian Kendrick to serve as the commissioner of administration, the state’s top budget official. Kendrick immediately required his approval for any contract worth at least $25,000.
“He said it was like forcing all state spending through a funnel,” Cochran said. “The biggest concern was Edwin letting contracts to his friends on his way out. Brian did a great job.”
Several weeks later, Roemer called for closing the governor’s New Orleans office, closing nine drivers license offices, selling two state airplanes and requiring wardens who lived rent-free on prison grounds to begin paying $300 per month. In January 1988, still two months before he would take office, Roemer called for closing 135 of the 760 beds at Charity Hospital in New Orleans.
The following month, Standard & Poor’s dropped Louisiana’s bond rating to the lowest in the country.
“It was rough. I mean, it was rough,” said Robert Adley, a state representative from Bossier Parish who chaired the House Appropriations Committee when Roemer became governor.
‘The least fun transition of all time’
Roemer took office on March 14 and called the Legislature into an immediate special session.
A week later, Roemer had the authority over the next 90 days to cut spending, eliminate entire programs, delay payments of state obligations until the next fiscal year, raise fees for state services and borrow $300 million.
Roemer said he would use his new powers judiciously and “with compassion.”
The Legislature also created a new state agency to refinance $1.3 billion in debts with proceeds from making purchases of certain goods subject to sales taxes.
With additional special sessions, Roemer and legislators eventually eliminated the budget deficit. But it became increasingly difficult for Roemer to get lawmakers to agree to make hard decisions.
“We kept driving, thinking we could pull people along with us,” Cochran said. “But we wore people out.”
Stung by a series of missteps, Roemer finished third when he ran for reelection in 1991. Edwards won their rematch, with then-state Rep. David Duke, R-Metairie, a former grand wizard of the Knights of the Ku Klux Klan, finishing second.
Looking back, Sanderson described Roemer’s time as governor-elect as “the least fun transition of all time. We started off in a hole. People didn’t like being told no, not now. We had to spend so much time saying no to people.”
He continued: “That’s not how you want to begin an administration – tell people that we’d have to make cuts. People were interested in jobs and new projects, but everything had to be put on hold.”
At the time, Mark Drennen headed the Public Affairs Research Council of Louisiana and later served as commissioner of administration during Gov. Mike Foster’s two terms in office.
Drennen said one lesson that Moreno and her team are applying is “you have to build consensus among the political leadership. You can’t cut enough money out of the budget without severe hardship. No solution is going to be pretty, but you need a solution to prevent the devastation of the operations of government.”
Adley served in the state Senate while Moreno was in the state House.
“I think Moreno has the political courage that’s needed,” he said. “Whichever route you take, they are very unpopular decisions. That’s tough. So it won’t be easy.”