Formally organizing their
enthusiasms as the Louisiana Budget Reform
Coalition in the past few months, more than a year prior to that various
group members have criticized some long-standing budgetary tactics employed in
the executive budget and ratified by the Legislature. Drawing their special
scorn has been the practice of using “one-time” money to provide some funding,
generally in the range of 1-2 percent, of operating expenses. “One-time money”
has come to mean a lot of things, but generally as used it includes funds from
one-off transactions such as sale of government assets or a windfall of some
kind and monies dedicated for a certain purpose that gets used for another
courtesy of a supplemental appropriations bill called a “funds sweep.”
But their problem to date
has been they have used the idea mostly as a political cudgel that sounds great
and scores points for election purposes, but actually prevented any real
progress in improving the state’s fiscal structure. Their great bane, one-time
money, they declared a pox upon in advocating it never be used to fund
operating expenses, but never seemed to grasp it was just a symptom of the real
disease wherein lay the true cause of budgeting distress.
They weren’t entirely wrong. While the Gov. Bobby Jindal Administration started out eschewing the use of such funding, in the past couple of years a few of its tactics in using it have gotten increasingly sketchy. For this current fiscal year, for example, it borrowed $20 million from a subsidiary state political subdivision to fund operations; for the upcoming one, it wants to take out $100 million more. Or, it is using a refinancing windfall of sorts to plug into current operations. While neither is as crass as borrowing money to pay for operating expenses – the “payback” to the unit will be in capital projects and the refinancing bonus comes courtesy of an instrument connected to the purpose on which the money will be spent – they really push the envelope and are verging on desperation to find funding.
Unfortunately, much of the remaining
of this category of expenditure does not come from sources that are neither
predictable nor recurring. The sweeps dip into a myriad of funds that have
grown and grown because, unless government wanted to spend money just to spend
money, their dedications produce far more revenue than there is practical defined
use of them. In essence, this money becomes trapped, tied to a low-priority
item where, in any rational or objective sense, they simply aren’t needed for
that purpose. For example using the borrowing listed above, which is on behalf
of the Ernest N. Morial Convention Center in New Orleans, unless we wanted to
build a palace and staff it with people using $100 bills from its fund to light
their cigars, it will never spend all the money it currently has stashed.
Many of the 300 or so funds
in the state (and this example isn’t even one of the state’s, but is enabled by
state legislation) resemble this, because when set up these dedications were
neither viewed holistically relative to other funding mechanisms nor had any
sufficient thought given to them in priority terms relative to all other state
needs. This crazy system that segregates about three-quarters of all state-generated
revenues from flexible use is what ends up starving areas of real need that
exhibit genuine priority. Thus, the state is flush with cash, both in terms of
current revenues and in that laying idle (to the tune of $2.3 billion at the
end of fiscal
year 2012), but because it gets misallocated from the start things like higher
education funding crises occur.
Sweeps then become the
necessary corrective, to get excess funds from where they aren’t needed to
areas of higher priority – as long as we assume priority is high enough to
justify the collection of that amount of money, regardless of how it got into
the state treasury, in the first place. But until recently, the “hawks” refused
to countenance the practice, trying in the last
legislative session to prevent the practice for no other reason than the
money being used was tainted by being obtained through a sweep. They never made
any case to justify this redlining; they never demonstrated that it was not
recurring and predictable and they never explained why it should remain idle
when clearly too much was being collected for the stated purposes.
More to the point, the real
problem stemmed from having too many dedications collecting in excess of actual
need, thereby indicating the genuine solution came from loosening suspect dedications,
in part by reducing their take or in their totality. Naturally, it would
require political courage to do so, in bucking special interests who wanted
that steady stream of cash and in having to make hard choices yearly instead of
bleating about they had no control and abdicating all responsibility, then
claiming to fix it all by cordoning off funds of illegitimate provenance.
Which is why it became too
easy to paint them as political opportunists not really committed to improving
the fiscal environment. As the actual problem was an ill-considered bookkeeping
system combined with a thoughtless process for prioritizing, any suggestions
for change that did not acknowledge these were the flaws needing correcting not
only was unhelpful but also detracted from a genuine solution, by spreading the
myth that all would be well if planners just didn’t use the dirty money. Yet
many self-righteously went on in this mode for months, if not years.
Until maybe now. The state’s
premier political analyst employed in the print media, the Times-Picayune’s/NOLA.com’s/whatever-it-is-now’s James Varney snagged
an interview with the presumed leader of the group, state Rep. Brett Geymann,
and in it suddenly things came out of his mouth that never before for public
consumption had been uttered (credit to Varney here because he asked probing
questions that the rest of the state’s mainstream media members seem to have neglected).
For the first time, he acknowledged that statutory dedications were a problem,
that as part of a solution that “that statutory indications [sic] can be undone.”
He said to “put all that on the table” (just statutorily, not constitutionally dedicated)
and apparently had this epiphany as a result of consultations across the state
over the past several months.
He also appeared to back off
the fatwa issued previously about
one-time money. However, to justify the shifting stance he engaged in a bit of legerdemain,
by saying (when Varney pressed him) that past opposition to using money out of
dedicated funds was because “it's never gone through the R[evenue] E[stimating]
C[onference] process and it's never been recognized as anything – it's not
recurring, it's not non-recurring. So we have to call it one-time money, OK?”
Uh, no we don’t, at least
not according to the law and Constitution. The REC never has been
intended for use that way nor does the Constitution define “one-time money.” In
fact, statute defines
as not being nonrecurring in nature money which comprises “revenues received by
the state from any source which has been available for the preceding two fiscal
years or which will be available for the succeeding two fiscal years” – such as
unappropriated dollars in dedicated funds that require appropriation for their use.
That implies this funding actually is recurring, but even without that implication
they definitively are not nonrecurring. So you logically can’t be against its use if
you based your argument on how unwise it is to spend money that is neither
recurring nor predictable in appearance.
This leads to two
conclusions: either Geymann, in his third term in the House, is ignorant of the
law and Constitution, or he is being disingenuous in the attempt to put a fig
leaf over a change in philosophy and/or strategy. One-time money from funds
sweeps already has been defined as recurring, without needing the REC to intervene
and bless it as such; trying to obfuscate this in an effort to save face doesn’t
change that fact or that, regardless of statutory wordings, on its face
obviously these were recurring bucks. A label in your mind might change, but the essence of the concept being described does not.
According to Geymann, it becomes all peachy-keen “if the REC would do
what we think they're [sic] supposed to be doing,” but even if it doesn’t –
that is, does not at least annually go into each and every fund and declare how
many recurring funds is in each of the hundreds of them – there’s no reason to
abandon this apparently novel-to-them (if he speaks for all group members)
understanding that one-time money is not the problem, it’s the fiscal structure
that creates the necessity for its existence that is. If they stick to this reconceptualizing, real progress can be made, even if (in response to other Varney questions) Geymann abjured from committing to the biggest discussion of all – whether all the revenue currently taken is necessary to support current spending levels, given the legitimate objects of government and optimal use of the people's resources by it.
This new outlook conjoined to the group's other goals enhances their worthiness as objects of implementation. Let’s hope the conversion on this issue is sincere, for substituting a focus on the disease rather than its symptoms increases the chances for a successful cure.
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