Another act has been added to the drama of Louisiana budget-balancing, in a fashion that points finally to the denouement.
Last week, even as budget analysts projected a $261 million additional revenue shortfall for the fiscal year to close Jun. 30, the Revenue Estimating Commission refused to recognize this and incorporate it into state planning. The REC needs unanimity to act, and one of its four members, House Speaker Jim Tucker, refused to give his assent to this to the consternation of both the Gov. Bobby Jindal Administration and the Senate in the form of its Pres. Joel Chaisson.
Recently, Tucker had raised Chaisson’s hackles by maintaining he would not approve of use of the Budget Stabilization Fund to offset the already-existing current year shortfall unless it was replenished over the next budget year, which Chaisson rejected. Impressively, Tucker called the implicit bluff – the assumption the House had to have the funds available – by budgeting without them which has left the Senate consternated and the Administration uncertain and confused.
While there is some uncertainty to the projections, if they manifest when the next required fiscal snapshot is taken, by the beginning of October to close out the previous fiscal year, then they must be dealt with in the next budget. In essence, they would lop revenues off next year’s budget. This strategy may be better because the projections may be too pessimistic. Tucker also continues to refuse to recognize $406 million in tax amnesty money which could go to replenishment (since much of it would be classified as nonrecurring and one use of such funds would be to chunk them into the BSF).
However, doing so also plays into Tucker’s current position of resisting using the BSF (immediate replenishment in essence, as Chaisson has stated, is little more than a bookkeeping maneuver, so, even if he agreed, the net effect would be like not using the Fund). By hanging a deficit out already into next year, it may cool ardor to use it now.
He also newly has suggested paying back funds over three years instead of immediately. How this squares with the previous contention that the Constitution requires repayment quickly that trumped the Senate position that by statute it could wait remains unclear. But, most intriguingly, analysts say the state-sourced revenue declines may not yet be over, meaning the BSF could be used year as its use is triggered when revenues fall from previous levels.
That until now it was not predicted to do so has led to legislation – Chaisson’s SB1 and SB 2 – that would permit usage when revenues as a whole (meaning state plus federal) fall. Tucker has not been in favor of this and momentum to allow this, which would alter the fundamental idea of what the Fund is all about, now may recede.
These events suggest Tucker is trying to frame the issue to force deeper cuts now and use the Fund later, as opposed to Chaisson’s doing the opposite, without tampering with the present BSF mechanism. By refusing recognition, he almost assures that revenue projections will be lowered for next year, allowing BSF use under its current rules for next year. Taking deeper cuts now may mean reduced cuts next year and beyond, and the Fund will be full and available for use in the next three years, especially the fiscal year after the upcoming one where the removal of federal extra spending funds will create an even bigger hole (as long as the state part also continues to decline, but this may not happen). The lengthened repayment process also would facilitate this strategy.
Tucker holds all the cards to allow this to unfold. He can get the House to block any use of the BSF, force a slimmer budget onto the Senate and Administration, arrange revenue recognition to allow the Fund to be tapped starting next fiscal year, and get his three-year plan tacked onto something and into law within the week (final adjournment occurs no later than 6 PM Jun. 21). In exchange, he may let SB 1 and SB 2 go through which (with voter assent this fall) can allow for use of the Fund over the 2011-13 period as well as the 2010-11 fiscal year.This well could be the optimal path out of short-term fiscal difficulty for the state. And if Tucker can have the public assign credit to him for it, it may begin to erase the negative image that many got of him when he spearheaded the vetoed effort to pay part-time legislators like full-timers. In this case, his chances of continuing a political career after his last term is up in two years may be experiencing a resurrection.