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21.4.11

Unlike others, fiscal bill treats only symptom, not disease

State Rep. Brett Geymann’s HB 189 provokes an interesting argument about a somewhat questionable state practice, but in that respect, and imperfectly, only tries to treat the symptom, not the disease that direly needs addressing.

The bill would require a two-thirds supermajority in each chamber of the Louisiana Legislature to allow for use in operating budgets of “one-time” money, which the bill defines as money going into any special Treasury fund (that is, not the general fund) not forecasted to go there previously by the Revenue Estimating Conference (which applies to several large revenue streams but not to many small funds collecting taxes and fees for specific purposes) or money that that REC declares as recurring yet originates from one-time transactions, such as “court settlements, the sale of state facilities, and the privatization of state operations.”

From the start, the bill contains a conceptual flaw with its overbroad definition of “one-time.” For many funds, in this bill money gets defined as that, even if it comes from a recurring source either legal or constitutional, just because analysts and politicians failed to see it coming. And while it appears obvious that winning a court case or selling state assets do not represent stable revenue streams, why should privatization fall into this category? Greater efficiency produces gains not limited to a single event; it continues every year after. Such a provision perversely would discourage streamlining attempts, with policy-makers knowing that the agency or government could not reap rewards from greater efficiencies.

But regardless if these problems could be ameliorated through redefinition in the legislation, the entire premise of the bill deserves scrutiny. Asset sales and judgments come and go unpredictably and infrequently, but the main source of “one-time” monies historically used in the budget process comes from budgeters plucking money from one of over 200 active government-based funds that have their own dedicated revenue streams that often build up large reserves. This occurs as the dedication regime inflexibly shuffles too much money to these for their designed expenditures purposes where it then sits unused.

Under a more rational system with far fewer dedications, on an annual basis policy-makers could establish and implement spending priorities with a much larger pool of undedicated funds, increasing options and not privileging certain functions over others despite objective conditions that exist at the time. Were budgeting done this way, the practice of using, and even the very concept of, “one-time” money via raiding funds essentially would disappear.

Thus, this law really is not needed if legislators would get it in their heads to change the system. SB 113 (a constitutional amendment) and SB 114 (its enabling act) by state Sen. A.G. Crowe would start this process by providing more flexibility to budgeting in the use of these funds, state Sen. Gerald Long's SB 131 would do much the same, and SB 144 by state Sen. Mike Walsworth would mandate review of the funds with an eye towards getting rid of those dedications that no longer seem to have compelling, rationale reasons for their existences. State Rep. Kay Katz's HB 527 and Long's SB 137 would allow for use of interest in these funds in projected deficit situations. Pass measures like these and then some, and Geymann’s bill becomes necessary perhaps only to deal with things like settlements and asset sales.

Whether that would happen is another matter. Too many legislators like the current system because then they can claim it ties their hands and forces cuts in other areas – the two biggest by far being health care and higher education – unless enhanced revenues are created, i.e. tax increases. This fiction gets disproven every year that one-time bucks get created from funds for current operations, as all it takes is an appropriations bill to get those funds. Why not implement legal instruments that don’t require all of these annual exceptions on a permanent basis? Let’s hope this session the Legislature finds the courage to break away from this contrived and convoluted fiscal structure.

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