The first order of business is to deal with the results of the mandated Oct. 1 review of the past fiscal year, which for the first in years showed a deficit, of $108 million. Gov. Bobby Jindal is empowered to cut as much as three percent unilaterally from any budget unit with anything past that requiring legislative approval. Doing so on his own across the board would still leave around $28 million to be lopped off but other cost-saving measures might make up the difference.
However, what Jindal should do here is protect the two large areas of state spending that do not rely on constitutionally- or statutorily-protected funding sources, health care and higher education which already have been brutalized way out of proportion in response to previous deficit and reduced revenue forecasts. This would mean having to find even greater cost savings in order not to have legislative involvement.
But it may get almost twice as worse if another revenue source for this year’s budget gets shuffled out of contention by court order. A lawsuit has been filed arguing the Budget Stabilization Fund, from which $198 million was used to balance this fiscal year’s budget, must be refilled from excess mineral revenues this year. Those revenues were counted upon being spent on operating activities instead of going into the Fund.
While Senate lawmakers argued that a 2009 statute removed that requirement, and Jindal signed off on that assertion with his assent to this year’s operating budget, House legislators warned this could not override the Constitutional procedure. That now will be tested in court, and it would take some creative jurisprudence for the state to avoid payback this year, creating another deficit.
(Although it all may be moot, depending on the impact of the needless oil exploration moratorium in the Gulf of Mexico. The refreshment provision kicks in only after $750 million in severance, royalty, rental, and bonus money is collected. The latest forecast pegged that figure at around $1.245 billion, but the moratorium could make it much lower. Still, gas leasing activity may keep things propped up enough.)
This could be altered, amending the Constitution so that the refreshment doesn’t occur in a year in which the Fund gets tapped, but this would require the enabling legislation to put it on the ballot and before the fiscal year is up. That means an April election for amendment approval which means a special session is the only alternative given the timing.
But why not? There’s already good reason to have a special session in order to change the straitjacketed way in which revenues are allocated for spending, requiring statutory and constitutional solutions prior to the end of the fiscal year in June. So now there’s one more imperative to schedule a session no later than the beginning of next year to cue up April statewide votes and hopefully passage of them.