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15.6.09

Fiscal pain by some emphasizes need for flexibility

We’ll find out shortly whether the resolve of Gov. Bobby Jindal pays off with bills to restructure the state’s fiscal budgetary procedures.

A criticism of the mechanisms placed into law and the Louisiana Constitution is that, in times such as these when forecasted budget deficits cause significant restructuring of state spending patterns, inflexibility leads to sub-optimal policy choices. Specifically in this cycle, disproportionate chunks must be taken out of health care and higher education due to these strictures.

The recognition basically has sunk in. The Louisiana State University system finally reconciled itself to carry out such reductions, and health care providers continue to lament the need as well, which in its case end up being even more significant because there often is a matching federal dollar component to their expenditures.

But all of this agony may have a larger political point. The Jindal Administration spawned a large number of bills addressing these kinds of matters, many of which will surface in front of the House Appropriations Committee today. They are designed to increase budgetary flexibility.

Interestingly, there is non-trivial opposition to such measures. Some argue that certain functions are too important not to be protected, while others point out that the increased flexibility could allow government to transfer funds put into account directly from the non-government sector to benefit the donors. Several ardent opponents of these measures appear to be on the committee. However, the stark reality of the costs of the inflexible system are being loudly trumpeted by the most prominent victims of it, higher education and health care, putting pressure on the Legislature to pass these measure for Jindal’s signature.

Unfortunately, one outstanding measure, HB 738 by state Rep. Joel Robideaux which would require review of funds every four years to see whether they should continue with special protections that reduce flexibility, is not being considered along with the other flexibility bills of Senate Pres. Joel Chaisson SB 1, SB 2, and SB 34. It would do considerable service if the committee would amend its provisions onto one of these other bills.

Successful passage of these bills not significantly altered out of this committee probably assures they will be made into law. Hopefully that proper outcome will occur today.

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