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8.5.12

Legislators who preach fiscal restraint must practice it


There’s more than just a whiff of hypocrisy emanating from so-called fiscal conservatives if they want to have their cake and eat it too in dealing projected present and future budget deficits in Louisiana.

The state finds it must close a $210.5 million gap in the current fiscal year ending Jun. 30, and then a $303.3 million deficit for the next prior to the Legislature’s final adjournment on Jun. 4. The problems are interrelated: the lower predicted amount for this year is what sets a lower baseline for the next (70 percent of the shortfall), which then adds more (the remaining 30 percent) on to it.

One approach could be to reduce spending by the required amount over the next 50 days, then apportion it out over the next 365 plus the additional. While the back half of that can work, compressing such a huge reduction compared to a relatively short period of time seems unworkable. Thus, the Gov. Bobby Jindal Administration and some in the Legislature favor using at least part of the Budget Stabilization Fund to offset the short-term deficit.


But others in the Legislature are discussing using an accounting trick to not deal with the current deficit. Technically, corrective action concerning a budget deficit occurs when the monthly budget report shows a total appropriation for a fund exceeds the forecast and the Joint Legislative Committee on the Budget ratifies that conclusion. Only after that has happened may the governor then have to take corrective action. The trick is to wait until July for the JLCB to do that.

These others are self-described fiscal conservatives who maintain that there need to be deeper cuts in state government spending. In essence, their strategy would be to create a cut next year in the neighborhood of almost $514 million, or about 2 percent, off next year’s budget prior to the change in forecast in late April. Their objection to using the BSF is that it essentially shields for a short time the reality that the state spends too much given its revenue picture. Tossing away that crutch, which just delays the reckoning by allowing lower-priority spending to continue, would spur the necessary action to set proper priorities and excise the lower-priority functions and their costs, which needs to be done anyway so the sooner the better.

The only problem in this line of thinking is that legislators already have the opportunity to put their money where their mouths are, and fail miserably to do so. As this space as noted many times, the fact that the state has so many dedicated funds misaligns revenue sources with priorities, which then necessitates rebalancing. Funds that could go to funding priorities such as health care and higher education instead end up in things like the Louisiana Filmmakers Grant Fund or the Telephonic Solicitation Relief Fund, needing later diversion in the budget process (a “funds sweep”) which build up balances sufficient to get dipped into this year to the tune of over $100,000 each.

But rather than change this system by loosening dedications in order to set proper prioritization, lack of political courage, including the ability to fob off making decisions that may upset some interests by disclaiming ability to engage in this painstaking process every year because of these dedications, allows it to continue. So why should we believe they will be any more likely to make those prioritization choices in budget cutting for the future? Indeed, the typical way that legislators deal with the issues is to punt to the Division of Administration to make cuts, as they apparently plan to do in this instance.

To make matters worse, the solution practiced in the breach to circumvent the straitjacket imposed by the dedications, sweeping funds, is constrained with the assent of many of these wishing to push the deficit forward with a House rule that constrains these sweeps. Again, they preach this is fiscal prudence by saying these “one-time” monies, undependable on a permanent basis, are just that and this tactic also serves as another crutch to making spending choices with recurring revenues.

So how is this tactic of pushing this year’s deficit to the next exemplifying fiscal prudence? Just like hiding behind their refusal to agitate for loosening of dedications and in obstructing the ad hoc mechanism to correct for that, this also betrays their preference for form over substance. How can you claim to be for more fiscal responsibility in spending when you want to put off dealing with a deficit?

With cuts so late to exclusively solving for the deficit, being impossible, the only alternatives are to have a combination of cuts and use of the BSF, or to kick the can down the road. You cannot claim to be a fiscal conservative and support delaying the inevitable and not be acting hypocritically. Legislators need to deal with this year’s deficit, now.

3 comments:

Anonymous said...

You are changing the subject and trying to hide the ball (again and again).

The real issue is not what you write of but rather why are we having these deficits multiple times each year for the past two or three years.

Who is the CEO? Who is in charge? Do they know what they are doing? Or, is this continuing mismanagement by the Administration?

As Jeremy Alford wrote today in a brilliant article in Gambit: "Jindal's bad math has become a chronic problem for Louisiana." He goes further to say about the Governor: "If he has a fiscal policy, it could be summed up in a question: Why deal with a budget crisis today when you can put it off til tomorrow?"

No matter how much you try to change the subject, to hide the ball and blame someone else, the chickens are coming home to roost and the citizenry is beginning to notice that the emperor has no clothes.

The sad part is that all of this is tremendously devastating to the people of Louisiana.

Anonymous said...

AMEN!

See the political cartoon in the Advocate this morning. Says, in a picture, the same thing.

Mr. Harris Plutocrat said...

It's astounding how delusional Jeff can be on these issues. The Gambit told everyone plainly just how awful Jindal's fiscal and budget actions have been for the state. This is typical conservative stuff. Hide behind the populism of lower tax rates, pray to the tax fairy, hurl abuse at and scapegoat absent liberals who are nowhere near power in this state, and then completely avoid all the red flags and consequences that present themselves in the data. It's just like on the federal level, where conservatives are consistently running the economy into a ditch, while democrats drag the economy back up. Jobs, GDP, stock market, international prestige, spending, % of people with health insurance. It seems like every metric is against these idiot anti-science, anti-empiricism, anti-prudence, pro-wasteful spending, pro-unnecessary war, anti-minority politicians.