Job done for Gov. Bobby Jindal with the 2008 Second Extraordinary Session of the Louisiana Legislature, which disposed in its entirety $1.088 billion in nonrecurring surplus funds, and about $23 million of surplus recurring funds. When he argued he “batted 1.000” for this session he called he wasn’t far off from the truth.
It wasn’t quite that high because Jindal did have to swallow an extra $3 million or so of recurring spending on tax breaks for school uniforms and books for any student to get his $20 million break on private school tuition and home schooling expenses, he had to accept that money from transportation revenues could be diverted from transportation infrastructure expenses in time of budgetary need, and put up with a minor redirection of one-time expenditures to lower-priority rural roads from pressing unfunded accrued liabilities needs, but overall he got most of what he wanted.
With that settled, it’s time for Jindal to revisit the biggest weakness of his contemplated 2008-09 budget since apparently the only tax cuts coming were three enacted during this special session, all aimed at business. None are forthcoming for anybody in the regular session, but that’s understandable given the Gov. Kathleen Blanco Administration created budgetary problems in overspending and finding ways to shift funds around essentially allowing one-time revenues to back commitments to permanent expenditures.
Still, Jindal must do a better job is setting the stage for future tax cuts. The biggest problem his administration faces is the trickling away of federal disaster recovery expenditure begins after this year and this will cause, it predicts, in the state’s general fund deficits over the next four years in the $1.2 to $1.9 billion range. Dedicated funds and other revenues such as from the federal government can make a dent in this but it a good chuck of change even by government standards. While the shift of priorities in the Jindal plan will spur some revenue growth, it’s not going to be enough with those numbers to offer any tax relief.
Thus, Jindal needs to set up now conditions that could allow for at least some in his final year in office, and the best way to do so is to pump up the cushion know as the Budget Stabilization Fund, or colloquially the “Rainy Day Fund.” The state may pull a third of the balance from it every other year if a continuing operations deficit is forecast. After the special session that deposited a little more into it, the funds has around three-quarters of a billion dollars.
But more can be added, up to four percent of total state revenue receipts for the previous year, which would indicate about $1.2 billion or adding around $450 million. And as it is, Jindal’s budget would seem to have around $437 million available, about $307 million designated for a fund, already containing $140 million, to attract large employers which would be better used to improve conditions for all through tax relief, another $60 million to fund nursing homes already blessed with an overgenerous payment scheme, and about $70 million to give yet another raise to teachers whose performance simply does not merit any pay increase.
If Jindal would commit that to the Fund, with interest it would be over $1.2 billion for next fiscal year, meaning he could shave off over $400 billion to close out a deficit. Perhaps by the next year, his third, his restructuring may have closed the deficit gap considerably, and by his fourth he could offer a tax cut to further stimulate revenues going forward.
Simply, the three planned expenditures above are not needed and certainly if those funds could be used to create a tax cut three years from now that is a far superior use of them. The Jindal Administration needs to revisit these decisions and do a better job in this budget to set up a tax cut during this term.
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