Jindal budget plans have practical, political problems

Until now, Gov. Bobby Jindal has shown about as good a hand as possible in directing Louisiana through budgetary difficulties. But he stumbles with his latest effort to resolve the recently-declared shortfall for this fiscal year and the related reduction for the next.

Jindal actually had to reallocate almost $47 million more than the $319 million certified by the Revenue Estimating Conference for this fiscal year because of unanticipated expenses. The bulk of this will come from one-time money, part from settlement expenses left over that were less than anticipated, but the rest from money that possibly will have to be spent next fiscal year on another settlement.

Adding that sum to the forecasted gap of $245 million for next year, Jindal plans to accomplish eliminating that by dependence upon predicted legislation in Congress that will shovel money to the states. Jindal has been a past critic of such plans for the depressive effect they have on the economy and escalation of public debt they create. Even though each chamber of Congress has passed different bills, a reconciled one that becomes law could give the state more than the expected settlement costs plus the forecasted gap.

But another major assumption by Jindal also changes the complexion of his strategy. The Conference believed this may be the last downward revision needed of state-generated revenues, which means next year the Budget Stabilization Fund could not be used to plug any shortfall. Yet Jindal is banking on using the Fund next year in order to offset the loss of other federal dollars used this and next fiscal year from the 2009 federal spending bill which are greater than the 2010 versions now active. This only can happen if two-thirds of each chamber of the Legislature goes along with that joined by a majority vote of the people to amend the state Constitution to do so.

As previously noted, it’s not a good idea to change the Fund in that manner (allowing it to be used when federal largesse goes down) and there’s no guarantee the two needed majorities will manifest to make that happen. Therefore, it would be smarter to invoke the fund this year, which will cover the expected settlement costs of next year, and leave that there.

Further, what of the more than $300 million “Louisiana Purchase” deal included in the ruinous Health Care and Education Reconciliation Act of 2010? Jindal did not budget for it not being sure that the bad bill to which it was attached could be rammed down America’s throat, a wise precaution, and being against it philosophically. But now it’s here, so should it not solve for the forecast shortfall? And to do so would allow Jindal to be consistent in his policy worldview of eschewing support for any spending bill in 2009 now apparently gone by the wayside as he budgets for 2011.

While continuing his sage and heretofore successful attempts to root out inefficiency and unwise expenditures in state government, Jindal should roll as many health care bucks forward as possible from one-time monies courtesy of the Purchase mixed in with Fund proceeds to budget for no additional federal spending bill dollars. If they then fall into his lap, more reallocations can be done to use the money as long as the priorities are sensible. This is a better course that relies on certainties rather than contingencies and lets Jindal stay true to his beliefs rather than set them aside temporarily for the sake of expediency.