Last month, the state reported that it expected that income
tax collections would be up over $212 million over what was forecast for
the past fiscal year, although when netting out other things the expected
excess would be $130 million. In legal terms, this becomes reality only after
the Revenue Estimating Conference
recognizes it, with its next meeting set for the middle of December. Normally, as
long as the bonus is from recurring sources and not over the state expenditure
limit, as would be in this case, the state is free to spend it as it likes.
The Gov. Bobby
Jindal Administration has plans for $94 million of it, to finance a gap in
cuts triggered in the state health care system by a sudden decision by the
federal government to stop paying the state excess Medicaid funds, just after
the new fiscal year began Jul. 1. Unless $94 million materializes one way or
the other, further cuts will have to be made that already have generated
plenty of controversy. But a dispute has arisen over whether an appropriations
bill to fund this year’s budget allows this.
Act
597 from last session, best known as the vehicle that allowed for the sweep
of a couple of hundred million dollars of “one-time money” to balance this year’s
budget, also included a provision intended to placate the opponents to another
budgetary maneuver, tapping the state’s Budget Stabilization Fund or savings
account. Section 4 instructs the state treasurer, to the tune of the $204.7
million of money disgorged from the BSF, to “deposit into the [Budget Stabilization
Replenishment F]und the difference between the official forecast of revenue
available for expenditures for Fiscal Year 2011-2012 adopted by the Revenue
Estimating Conference on April 24, 2012, and actual collections of revenue available for expenditures in Fiscal Year
2011-2012.” Anything this new vessel captured was supposed to go to back to the
BSF, presumably at the end of a fiscal year.
The bill’s author, state Rep. Jim Fannin,
pointed out that neither a portion nor the entirety of any recognized excess
funds less than $204.7 million in the previous fiscal year could go to spending
in place of the replenishment tactic. Commissioner of Administration Paul Rainwater disagreed,
saying the provision expired at the end of the fiscal year relative to the
money. To make matters even more interesting, Treasurer John
Kennedy, almost a certain candidate for governor in 2015, concurred
with Fannin.
Yet determining who is correct rests upon the intricacies of the REC’s
functioning. Note again that any “difference” becomes reality only when the REC
rules that way. It is composed of the Speaker of the House, the President of
the Senate, the governor, and a university faculty member in economics, or the
designees of all except the latter. There’s nothing that requires them to
recognize any thing at any time, and historically their panel has not done so
when it has determined a wait-and-see attitude was appropriate.
So, Rainwater could be correct, if the REC decided when it was going to
act on the matter to recognize the excess revenues in fiscal year 2012-13,
rather than FY 2012, despite the fact it seems they came in temporally before
Jun. 30, 2012. Whether the REC would shunt the funds a year ahead is another
matter, but it would be entirely legal for it to do so. Or, it could wait many
months and see how the revenue picture developed, to figure out whether the $94
million might get made up in FY 2013 excess funds, before recognizing this $130
million as FY 2012 thereby plopping that into the fund.
Whether the REC would pursue these options is another matter. Pressure
by fiscal conservatives in both chambers who had stumped for the section in Act
597 may cause the chamber leaders not to want to front-date revenues or to wait
on recognition. The independent economist James Richardson may look askance at
the creative timing involved, and REC decisions must be made unanimously.
Still, this would mean that Jindal, or in reality Rainwater as the commissioner
typically attends REC meetings, as the gubernatorial designee, could veto any
attempt to recognize the money in FY 2012 or, more likely, press for delay.
By delaying, which carries no budget consequences as balances are
sufficient to carry the state the entire year and legally the REC has until the
end of the fiscal year to recognize for that fiscal year, either the problem solves
itself or pressure could be put on the Legislature to pass a statute in next
spring’s session undoing the relevant part of 2012’s Act 597. So, the only way
this could blow up for Jindal would be if at least one other member of the REC
insisted on FY 2012 recognition throughout FY 2013, and the Legislature refused
to undo, and state revenues did not pick up $94 million worth (or another
figure, depending on how reductions worked, which also if they end up saving
more than anticipated could moot the issue) by Jun. 30. 2013.
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