Legislators gripe about system they made, refuse to fix

We hear the same complaints again and again from legislators who talk a great game but when it comes to action are gutless wonders when it comes to budgeting and spending in Louisiana. If they’d just get it together, the public could revel in their silence with the problem solved.

That problem is, in times of fiscal stress as now, the state’s propensity is to conduct “funds sweeps” for “one-time money” in order to balance the budget. The state has hundreds of dedications of revenues and fees-for-service tucked into law and the Constitution, making for mostly hands off concerning about three-quarters of all monies coming into the treasury from state sources. Unencumbered funds go essentially only to three areas, with the majority to higher education and health care, so if forecast deficits for next year’s budget fall, the money only comes out of this quarter of the funding, disproportionately affecting these areas.

To soften the blow of further reductions on these areas, one strategy is to pass a bill that raids some of the hundreds of separate funds, which accumulate surpluses they probably never would use. That happens because the dedication set up for them is indiscriminate, by definition making their purposes equally as important as all others similarly situated but more important than areas without dedications, even if in the real world some state functions clearly should have much higher priority and need more funding than others subject to dedication. Thus the vacuuming procedure, a rebalancing of sorts to correct imbalances created by budgeting by autopilot.

Yet it’s tantamount to hypocrisy when you hear some legislators decrying the use of one-time money and/or in favor of making bigger cuts to state government as a whole because it is entirely within their power to change the system to get rid of a problem they created. With this current regime, with many dedicated dollars going to low-priority areas, one-time monies have to materialize to prevent ill-advised reductions. Loosen those dedications and the money could be appropriated to areas of need without having to dip into funds, because these pots would not be accumulating bucks and idly sitting by to be ladled out, with money having gone already to where it is best utilized.

But this shell game continues because legislators refuse even to take the initial steps to changing this system. Only a couple of years back the state’s Commission on Streamlining Government recommended that a number of the statutory (which are most) dedications be abolished at the end of fiscal year 2011. This was supposed to dovetail with R.S. 49:308.5 to set up a regular system of review of dedications for potential ending. Instead, nothing has been done to present either in whole or on a regular basis a partial list of funds that need termination, because lawmakers don’t want to become engaged in battles with the special interests than managed to wangle a dedication for a purpose, sometimes decades ago.

The current system also gives them a chance to disavow responsibility to deal with funding crises, if not to pontificate disingenuously about them. Instead of making choices and then having to live with the policy and electoral consequences of them, they throw up their hands while claiming them tied by dedications. The crassest then complain about how it’s bad practice to use one-time money – which they never would have to do if they weren’t such cowards on the surfeit of dedications to begin with.

Related to this problem is the number of tax exemptions, credits, and rebates that subsidize some activities that bring more costs to the state than benefits without any associated desirable nonpecuniary benefits, which themselves have no systematic review attached to them. Just two examples, which together if ended would be about enough to wipe out the forecast FY 2013 deficit: the film tax credits that have taken at least $440 million more out of the state treasury than put into it since their inception, and the state’s earned income tax credit that encourages reduced work effort and is rendered largely ineffective by generous welfare programs that in America that pay the average recipient under the poverty line $16,800 annually.

So don’t buy the crocodile tears coming from legislators on this one. This present wailing and gnashing of teeth never would happen if the straitjacket around the budget process got removed. They simply choose not to do it, and expect to avoid all blame or even to make political capital out of it without us catching on to their game.