Make loosening LA dedications part of larger strategy

Perhaps energized by his service leading the Commission on Streamlining Government, state Sen. Jack Donahue has proclaimed the time has come to make “undedicated” certain funds in Louisiana’s fiscal structure. It’s a good start, but not a panacea for the constricted regime.

Donahue correctly notes that with so much money required to be funneled to certain purposes – of the state’s $9.1 billion that flows into the general fund about $5 billion is dedicated, and of the $14.6 billion that comes into state coffers from other state sources the corresponding figure is about $3.9 billion – that leaves reduced flexibility for budgeting. As a result, with about 40 percent of state-generated money tied up of the remainder about three-quarters of the remainder end up financing health care (the largest in absolute terms) and higher education (in terms of its overall receipts, the largest relative recipient of state money not dedicated). Thus, these two areas bear the brunt of any budget adjustments.

Reform of this would require that dedicated revenue streams not go to all of the 293 statutory- and 35 Constitution-dedicated funds (a helpful list of all funds as of the beginning of this fiscal year is here and balances as of the end of the third quarter in the statutory funds are here). Thus, more discretionary money would be available that might reduce monies flowing to purposes now dedicated that are considered of lower priority than those from the areas that have no dedication, given the optimal use of the incremental dollar in question.

But it’s not as simple as that. Just because nearly $9 billion potentially could be loosened doesn’t mean either it wise to do so or in the cases that it may be that substantial redirection could occur. Many of the higher-ticket items go to some pretty important priorities, such as the Minimum Foundation Program (unique among all dedications in that it is the most difficult to redirect in times of necessity) for elementary and secondary education and the Budget Stabilization Fund to act as a savings account.

Further, some things are essentially a necessity. Funds set up to satisfy court judgments, things tied to debt such as (unwisely, courtesy of a former commissioner of agriculture who way overstayed his tenure) the Boll Weevil Eradication Fund, and the Medicaid Trust Fund for the Elderly to comply with federal guidelines are among these.

Finally, a large number of these dedications are collected from a discrete number of payers that don’t create very large balances. There are dozens of regional and local education funds, tourism funds, conservation funds, and the like that citizens of local jurisdictions only pay into and theoretically only receive the benefits, as well as associations of industries and professions who use the state to collect funds from their kind by law that then are dispersed for their own purposes. Here, the question is of fairness where if money comes from a small group, it ought to go back roughly to that group, and they don’t provide much in the way of revenues anyway.

Thus, the “undedication” of funds by the Legislature and constitutional amendment can be only one part of a larger strategy. Another part would be to make it easier for money to be sliced out of such funds in times of budgetary deficit – keep the procedures the same, but make the fractions that can chopped out without going to the most drastic means higher (as was attempted last year). Finally, the state should get out the business entirely of collecting and holding onto money for a number of local entities and groups. If the St. Landry Parish School District, for example, wants to get a cut of gaming revenue to use to enhance career and technical education initiatives, contracts between it and Evangeline Downs can allow for the money to go directly to that authority instead of it being a matter of state law and oversight. Or, if the seafood industry wants to promote and market oysters by tacking on a five cent fee to every oyster tag sold, let it make this an assessment on its own members without involving the state. Let these entities be their own bankers and not drag the state or state law into it.

Even such a comprehensive strategy as this may not spring loose as much as $100 million. Still, spreading most of that out to health care and higher education can offset cuts that, if deficit projections today are realized tomorrow, could go past the present inconvenient level and into the detrimental.