Extra revenues need to go to pay down retirement liability

Gov. Kathleen Blanco’s plans for additional revenues declared for this fiscal year by the Revenue Estimating Conference reflect more prudence than not, but she can do better.

The portion of the funds declared as non-recurring wisely will go towards paying off debts owed to the federal government for disaster assistance, as well as creating a fund to respond to future disasters. However, it must be noted that the state, over the next few years, is estimated to owe as much as $3 billion more. The emergency fund should be structured so that it could be used to pay off past debts such as these as well, but that still will leave the state with a huge bill.

However, her plans for the recurring funds are questionable. Pay raises for school support workers probably are more justifiable than those for teachers without measures for accountability attached. But her other priorities proposed for the recurring revenues, money needed for the state to build a new public school system in New Orleans, helping retired educators in the damaged areas, and taking care of health-care needs, probably are more important.

And the looming problem few elected officials seem willing to tackle isn’t mentioned at all but which represents perhaps the most compelling need, paying down the unfunded accrued liability in the state’s retirement systems. Sen. Walter Boasso’s SB 526 would commit the state to pay in the neighborhood of $110 million a year until 2029 which would lop off almost $2 billion of the interest owed on the estimated $12 billion that will be owed by then that the state is required to pay according to the Constitution.

Wisest would be for Blanco to commit to the spending under this bill, and the remaining $65 million can go for education and health care in damaged areas (retired educator needs will be more than addressed by shoring up the retirement systems). She should concentrate on these areas and pass on any pay raises. Again, prudence dictates that old problems be dealt with before new commitments get made.