Opportunities missed on LA budget, but not all bad

Despite my exhortations, the Louisiana Legislature didn’t choose the best of options in finally resolving its toughest budget situation in a regular session in many years, and it may get worse.

Last night, the operating budget HB 1 and the supplemental budget HB 1358 got the assent of both bodies which ended up hewing mostly to the Senate versions of them at the urging of Gov. Bobby Jindal. This has its pluses and minuses.

The Senate version recognized a revenue picture more deteriorated, which apparently will be recognized formally today after House Speaker Jim Tucker agreed to retreat from his refusal to do so. Tucker’s longer-term strategy was to prohibit essentially draining part of the Budget Stabilization Fund for an extended period in order to force larger cuts now meaning lesser ones in the future. To reduce pressure to do so, as part of his role on the Revenue Estimating Conference he vetoed making official new revenue projections that were lower.

The approach to which he relented does comport more to reality and thus force larger cuts than if not recognized. However, with Tucker’s assent now to extract money from the BSF without any promise that it will be repaid in the next budget year, they did not have to be as dramatic as Tucker and others in the House might have liked under its plan which probably would have been better in the long term. The Senate also forced fewer cuts onto government in general and more onto already-drastically-reduced higher education and indigent health care, the latter particularly unfortunate give federal matching dollars that could have been obtained and be valuable as the state tries to make the transition to a more efficient health care provision system.

Tucker also was unable to hold the line on emptying the Mega-Projects Fund, a wasteful use of taxpayer resources that attempts to spend money to bribe employers to come into the state rather than reducing short-term revenues through tax cuts that would attract business. Instead, the Senate left that with $55 million and raided the Emergency Response Fund which may not be a big issue if BP comes through with promises to pay for all oil spill disaster costs. If not, this could backfire.

Zeroing out the MPF would have rid the state of a major flaw in its economic policy-making, but the Jindal Administration argued that much of it was committed to unspecified and unconfirmed projects. However, if these ever do come to fruition, surely the money could have been found to fulfill commitments somewhere like the ERF or BSF (being as indicators are the state still may be lower on state-sourced revenues making it eligible to be tapped again) instead of letting dangle money when it might not be available for years, if ever used.

However, one Senate tactic deserves to be maintained. It refused to put in and took out from the House version it got “members amendments,” line items that shovel money to private and public entities in their districts. Whether some device will be found to reinsert House requests and room found for new Senate ones today remain to be seen, but the elimination of these would be a silver lining to a rough budget cycle.

This and revenue reduction reality recognition that forces future cuts are small victories compared to what could have been, and the former may yet become defeat snatched from the jaws of victory, but something to recall is that reduction in the size of state government in general, whatever the reason, rarely is a bad thing.