Readers may be forgiven if they get a headache trying to figure Louisiana’s budget situation at this time five days before session close. Typically in a session at this point details are being haggled about to fit a defined number. Instead, not only do we have no defined numbers, but even bigger breaks with precedent loom on the horizon.
Almost at adjournment sine die, the House and Senate differ over not just numbers, but over several assumptions after conclusion of Senate work on the budget yesterday. The Senate assumes use of the Budget Stabilization Fund ($198 million), proceeds from this fiscal year’s tax amnesty ($242 million), a deficit $261 million larger that must be paid this year out of next year’s funds, a deficit for next year of $57 million more, and the Mega-Projects Fund ($55 million) is committed to uses and unavailable for use. In addition, whether the BSF can be used next year, either by legislative change to make it easier to tap or because circumstance will make it available under present rules, and whether it must be refilled next year even if used this year, are unknowns subject to the political process. To add more uncertainty, nobody knows whether $13.6 million will be around as Gov. Bobby Jindal has yet to decide on the fate of a bill that would reduce drivers’ license collections by that much.
These assumptions of the Senate run entirely counter to the desires of the House leadership, where Speaker Jim Tucker refuses to use the BSF without paying it back next year (although he said he had a plan to make it over three years, which seems to be part of the bill to make fund tapping easier), refused to recognize the tax amnesty money, refused to recognize the extra deficit amounts, and remains skeptical about whether Mega-Project funds have been committed. Except for the last, until he gives legal assent to the Senate assumptions, they do not exist in a legal sense.
Thus, as noted previously, Tucker pretty much holds most of the cards in a strategy designed to reduce more spending now to make it easier and more certain to cut in the future. As such, his method is to be preferred. However, this does not mean that there are not some merits to the Senate’s approach. It reverses House cuts in higher education to about $25 million and health care to $25 million in part by getting rid of all House member amendments, surprisingly allowing none of their own, and funding to the governor’s office semi-version of them. These “slush funds” while attenuated by the efforts of Jindal, never were completely eliminated by him or legislators. This should be retained by the House.
The Senate also boosted spending on Medicaid to attract more federal dollars. As long as this extra money is used wisely, not just flung out there but coordinated with reform plans that include closing state charity hospitals, supports and services centers, and privatization of mental health services, it can properly broker the state into a transition to a more efficient system that will be challenged by the coming of the national Democrat-passed health care legislation that will increase demand for Medicaid while simultaneously increasing its costs and lowering quality.
Therefore, the best strategy would be to take the basic details of the House budget minus the slush and leverage that into about $100 million more for Medicaid. The Senate may have thought it was being clever and could think it would work a deal to restore these and add their own if Tucker gave in on something like recognizing amnesty proceeds or permitting BSF withdrawal. Instead, this alternative could delegitimize whole concept as legislators would find out over the next year that the world will not end if local groups and governments have to raise money on their own if the needs are even important enough to try to do so.
Tucker also should stand firm on draining the Mega-Projects Fund, which Jindal also apparently would oppose and could through a line-item veto; again, a historic opportunity that should not be passed up to end the counterproductive practice of paying people to do business in the state. The problem is for Jindal then he’d have to make $55 million in cuts elsewhere and no slush funds to excise to punish legislators. This tactic could then square with the Senate’s preferred amounts on higher education and health care, and if Jindal complained about “commitments” to the fund, Tucker could remind him that if they actually come about (few ever do), he’d find a way to rustle up the money when needed. The only leverage Jindal would have is whether to veto the $13.6 million fee reduction in exchange and have that retained money available for the fund, but given the large majorities that passed the bill he may risk an override with, again, no slush funds excising as a counter-threat to prevent that.
As painful as budgetary concerns have become and will escalate, it’ll be worth it, if this blueprint is followed, to have stakes driven through the hearts of two of the vampires that plague good policy-making in Louisiana, with the end of slush funds and removing of remaining funds from the corporate welfare program to where they may be used more wisely.