Hawks succeeding in defeating genuine spending reform

The self-styled “fiscal hawks” of the Louisiana House of Representatives won a couple of battles yesterday – at the cost of near-certain defeat in the larger war to control the state’s budgeting process and in empowering their strange bedfellow allies House Democrats.

Yesterday, the House Appropriations Committee went through the operating budget bill HB 1 and withdrew substantial funding for health care, and some for higher education, to excise what’s termed “one-time” money from that. This refers to money that is redirected from other funds, much tied to dedications of revenue, that comes from recurring sources, as well as other money from non-recurring sources such as asset sales. But it was all a mirage of sorts, for if passed by the House, perhaps almost exclusively by the majority Republicans, the Republican-controlled Senate is sure to put back in the nearly $500 million and return it for concurrence.

This tactic is to avoid the requirements of House Rule 7.19, which means that before a budget vote if this budget contains more than a growth factor over the previous year of one-time money, a two-thirds majority must be secured to proceed. With this kind of funding removed, this prior vote is not required for this version, nor for later concurrence in a budget returning after Senate action. It’s an approach tacitly endorsed by the Gov. Bobby Jindal Administration, whose budget is on the line.

The rule was a brainchild of the “hawks,” formally known as members of the Louisiana Budget Reform Campaign, to enforce their vision of fiscal prudence that states that in period of budget growth this kind of funding largely should be left to finance activities to which it is tied, regardless of the relative importance of those activities. Unfortunately, their conception is so narrow, by lumping in recurring funds with the nonrecurring, that they politically marginalize themselves instead of taking a more flexible approach, one that more validly reflects kinds of revenues, spending, and prioritization of spending, as recently recommended, which can serve as a step towards genuine fiscal system reform.

This approach might give them the influence that they have ceded to Democrats (almost all of the group are House Republicans; it includes one House Democrat, a House no-party member, and a Senate Republican) by the necessity to build their own budget. This document is necessary if they are to have any leverage at all, because without it, the shuttling happening now can moot their agenda with impunity. Only if they can send an alternative (most likely by hijacking the supplemental appropriations bill HB 677) that passes the floor that can persuade enough senators to take it up can they have anything more than the slightest influence.

Regardless, for this to succeed, in building their own budget they must work with the opposition for only that way can they get enough votes. And thereby they transfer influence to Democrats by giving them the power not just to foist tax increases, but also a chance to score political points. Getting rid of some tax exemptions isn’t necessarily a bad idea depending on what they are, as heard just months ago by the Legislature in its gathering of information about the utility of these, but which does have the effect of raising taxes selectively. The political problem comes as the Democrats can use the Republican “hawks” to claim that the GOP as a whole wants to raise taxes to fund more government, shifting the debate from the appropriate size of government, a debate Republicans win, to who best defends government programs, an argument Democrats win. Ironically, the only way forward for the group that prides itself as “fiscal conservative” is to espouse a most liberal approach of tax increases.

Only because of the “hawks” do Democrats get a chance to pass tax increases in order to replace the one-time revenue, or at the very least become relevant and needed in the budgeting decision. Regardless of the outcome – the current Jindal Administration strategy or a “hawks” alternative budget – Democrats become the necessary constituency for success in either case, when without the intra-party GOP split they would have little influence on the process nor any opportunity to shift the argument from the appropriate size of government.

Ironically, the scenario has played out to give the “hawks” two of their wishes. Part of their legislative platform has been earlier resolution of the budget in order to give legislators more time to vet it, and it’s already about to leave the House for Senate consideration with about a month before session’s end. And they get another because of the move to sideline them, a budget bereft of one-time money, which they will find impossible to vote against. Both of which, of course, will result in a final product back from the Senate probably chock full of one-time money with not a lot of time to deal with it.

So, let’s tote up the “hawks’” achievements. They get to cast a symbolic vote ratifying their agenda that does nothing substantively to “reform” the budget process. They empower their otherwise powerless ideological opponents in the budgeting battle and risk inviting the size of government to grow in the process. That’s good work so far if you want to look like a reformer instead of being a reformer. Or perhaps to be an economic liberal wolf in a conservative sheep’s clothing.

If they want to be true reformers and to hold fast to conservative principles, they need to come up with a budget alternative that avoids ridding useful tax exemptions and excises the uses of nonrecurring one-time money (such as was done in committee yesterday with the removal of a dollars-now-for-bricks-later provision from HB 1) that truly should be used as a last resort to correct the flaws in the current fiscal system – and that can pass the Senate. Otherwise, for now the defeat of real spending reform is complete.