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"One-time" money defined wrongly, invites wrong debate

As the state’s next fiscal year budget hurtles to resolution, the central debate among Louisiana policy-makers has become over the use of “one-time” money. Unfortunately, it’s the wrong debate using the wrong terminology.

To take a typical definition one might run across in the popular media, and one seemingly accepted by many politicians, these dollars are those “that likely will only materialize once.” The problem is, for much of what gets designated as this, it’s simply not accurate.

Some of what gets lumped into this category honestly can be called that. For example, one portion of money that never will come as recurring revenue is the sale or lease of the New Orleans Adolescent Hospital, now shuttered for a few years. That $35 million indeed is a single shot,“one-time” (and, ironically or perhaps hypocritically, remains in the budget after self-proclaimed budget hawks squawked they had purged the budget of this kind of spending).

Or, any money that goes into the Louisiana Mega-Projects Fund, which originally got put there from discretionary dollars with the intent of them being used to hand out business incentives, might be considered “one-time” if you really stretch the definition, since it has no dedicated funding stream. Still, that’s a reach because it was money that came from non-dedicated sources – such as income tax revenues, sales tax receipts, etc. – that are recurring by design. It’s really not “one-time” because it was a policy decision that diverted recurring revenues at certain discretionary points in time into this fund where it now sits for a dedicated purpose.

But a lot of what gets called “one-time” in fact comes from recurring revenue streams where the diversion is automatic. Take, for example, the Telephonic Solicitation Relief Fund, which the advocates for using “one-time” money want to excise nearly $120,000 from it and transfer it for use in the general fund. This fund collects money through the Telephonic Solicitation Relief Act of 2001, where fees to be able to operate as a solicitor and any fines from violations are put into this fund where “they shall be used solely for the implementation, administration, and enforcement.” Last fiscal year, they brought in $15,000 with no expenditures which brought the balance to $127,000.

Or how about something more substantial, the almost $2.5 million from the Riverboat Gaming Enforcement Fund, which monies come from fees for operators to conduct gaming and any fines collected for violations of the law in that regard? Last year, after all revenues came in, expenses for this enforcement left about $550,000 additional collected. The end balance was around $3.7 million.

The fact is, much of what is called “one-time” money comes from recurring revenue sources. It is likely to “materialize” often and is there because the dedicated funding that collects money and puts it there produced more revenues than are needed. The problem is not that these are contingency funds that may or may not appear at any given year, but that they are predictably occurring funds sequestered in the wrong places given the priorities of the state’s spending.

Thus, it’s a false debate about fiscal conservatism to argue that usage of these funds connotes some kind of living beyond means. The money is coming into the state already and it will continue to come in, albeit in a form initially not amenable to prioritization in use. Rather, a genuine debate about spending in the state is whether these dedicated funding sources should be in the form that they are that sabotages matching of resources to need, or even if they are necessary.


Anonymous said...

Prof. Sadow,

You need to read the law. It already defines what is recurring money. Why don't you tell your followers what the law is instead of your opinion about what you think it is.

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Jindal, a Republican, won re-election in last year's statewide cycle with an overwhelming 66 percent of the vote. His victory was such a foregone conclusion that the Louisiana Democratic Party could not find a credible challenger against him; the second place finisher was Tara Hollis, a middle-school teacher from tiny Haynesville who had never run for political office.

And the governor had some coattails. When the dust settled after the 2011 statewide elections, Republicans controlled 58 seats in the 105-member House of Representatives and 24 of the 39 seats in the Senate -- the first controlling majority for the GOP in Louisiana since Reconstruction. In addition, the six other statewide elected offices remained under Republican control, with no serious Democrat challengers for any of them.