The budget mess
As the state House of Representatives takes up the budget this week, it’s been four years since lawmakers have seen a surplus. For new members, that bygone concept seems as mythical as the unicorn.
With revenue projections declining and costs, particularly Medicaid, ever rising, there is no simple way, despite rhetorical claims, to make ends meet. The state’s fiscal situation may be bad but could be a lot worse. Or, as former House Speaker Jim Tucker would say, “I’ll take a budget crisis over a cash-flow crisis any day.” He could read a balance sheet to see that while the state is running deficits in the general fund, it is sitting on other piles of cash.
The most useful such pile is the so-called rainy day fund, or Budget Stabilization Fund. Up to one-third of its $647 million balance can be tapped, just enough to cover the $211 million shortfall for the fiscal year ending June 30.
Estimating revenues for months to years in advance is not rocket science; it’s harder, especially with an economic recovery that stubbornly is not living up to Gov. Bobby Jindal’s peppy rhetoric.
To take from that fund requires two-thirds legislative approval, and some fiscal conservatives are dead-set against it, even if not one of them has come up with a reasonable or unreasonable alternative solution to apply in the next seven weeks. The state has no business keeping a savings account when there are bills to pay, so legislators need to get over their qualms and make the withdrawal.
That’s the easy part. For the budget year starting July 1, the Revenue Estimating Conference, hoping not to be caught short again, has downgraded projections by another $304 million. That goes on top of the $895 million difference in projected expenses and expected revenues. It is slightly less horrible than it seems, for an added $200 million in state money would attract over $500 million in federal Medicaid matching funds, covering most of the problem.
To cover it all, in addition to new spending cuts, the latest plan calls for using about $346 million in so-called one-time money, which conservative legislators and others, including Sen. David Vitter, say is irresponsible.
This is not the first time we have had this argument. Every budget debate for the last four years has come down to a dispute over how much, if any, one-time money should be used.
That running controversy should tell us something: There is nothing more constant in state budgeting than one-time money—there is always some available. The kicker is that most of what is labeled “one-time” is not at all. Most of it comes from sweeping the unused balances of dozens of special funds—more piles of cash—which are replenished annually with dedicated taxes and fees. Does it make sense to call money “one-time” when it is there every year?
This year’s sweeps range from $20 million not spent by the New Orleans convention center authority to $183,949 in the Louisiana Filmmakers Grant Fund on down to $13 vacuumed from the Teacher Educational Aid for Children Fund.
Some sweeps hit politically sensitive nerves, like the $766,044 taken from but then restored to the Boll Weevil Eradication Fund. Business groups rallied against money being taken from funds into which they pay for state regulation. Local governments don’t want their locally raised funds to be swept. Sometimes legislators have gone along, sometimes not.
Every fund has a story of what won’t get done if the state seizes dollars not yet spent. But there is a larger story of what happens to higher education and health care, which have no dedicated funding.
Those protesting these fiscal fixes the loudest are silent on what specific cuts to make instead to programs and services. Without suggesting to college officials how to do so, the Appropriations Committee last week ordered another $50 million excised from campus budgets.
Is that any more responsible than taking unused balances from a wide array of dedicated funds?
Balancing budgets in hard times is messy business. There is a place, not here, for those who would stand on principle and never stoop to compromise. It’s called Congress, which has not passed a budget in over two years or balanced one in the last 10.
Since this Legislature and governor won’t raise taxes, don’t agree on deeper spending cuts and can’t print money, they are doing what they can.
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Comments from Stephen Moret
A winning pitch