This week, the House Appropriations
Committee takes up the operating budget HB
1. As introduced, it contains in its roughly $24 billion (with a several
hundred million more in ancillary and supplementary appropriations elsewhere) nearly
$500 million in “one-time” money. There are two kinds of this kind of funding,
one that is recurring where this money comes from other excessively funded dedicated
accounts not diverted into the general fund, and a nonrecurring kind, which
comes from one-off events such as property sales, settlements, and lending from
other state-created special funds.
A number of representatives, almost all Republicans, wish to excise these
monies from the budget. And the leverage they can use to cause this is the
rule, which states that (in a year such as this where the operating budget of
this year exceeds the prior year) any one-time money budgeted beyond a growth
factor requires a two-thirds vote to be inserted into the budget. This year,
the computation reveals that about $199
million may be implanted without triggering the rule. The Senate has no
such rule.
When first adopted two years ago, the rule put the House GOP into
immediate trouble. With vociferous advocates comprising roughly 35 members,
they had enough effectively to cast a veto over the use of funds beyond the
factor. The problem was it decreased their power while giving the moribund
Democrat caucus new life. Those Democrats almost to a member have argued long
and loud for tax increases if not more spending, and the rule creates powerful
pressure for the former.
As some Republicans, even some of the group that favored the rule who
have named themselves “fiscal hawks,”
do not want to see spending decreased in the general fund from the belief that,
principally, health and higher education functions, even with major restructuring,
have seen enough reductions, then if one-time monies are sliced out the only
alternative to balance the budget would be tax increases. This plays right into
Democrats’ hands both ideologically and politically, with the latter aspect
providing an opportunity to resuscitate the party if they can claim a
Republican-controlled legislature (even with their assistance) raised taxes.
So far this session, that bullet has been dodged, as Republicans have rejected
tobacco tax increases that did not go entirely to nonrecurring purposes and
resisted the siren song of expanding Medicaid coverage, which next year actually
would boost state revenues but over the long run trap
the state into higher costs. And in the past couple of years they have
avoided it as well, courtesy of the Senate, the actions of which get around and
neutralize the rule. For example, last
year the Senate essentially restored money that the “hawks” had leveraged
out of the budget and the House passed it to the governor that way, over the
objections of them; in fact, nearly every of the 40 votes against it
came from Republicans. Note that by their actions, the balance of budgeting
power in the House shifted to Democrats.
But with HB 1 looming on the horizon as a whole Republicans risk political
defeat that would enliven Democrats further, courtesy of “hawk” plans to come up with an alternative that raises taxes, because their fatwa against both the recurring and nonrecurring kinds of one-time
money puts their party (minus Democrat Speaker Pro-Tem Walt Leger and
no-party state Rep. Dee Richard who
have aligned with group) in a politically unpalatable situation.
Any plan that does not cut expenditures any and cuts $500 million of
revenues out will necessitate tax increases of some kind. While there has been
talk of removing
state tax exceptions, courtesy of his past year’s Revenue Study Commission,
the fact is there isn’t that much out there that constitutes credits. That is,
there’s not $500 million of activities that state government subsidizes by its
issuance of tax credits that can be cut by statute. Getting rid of any other
kind of tax exception allows Democrats to argue Republican-led state government
increased taxes (selectively, perhaps, but increased nonetheless). Gov. Bobby
Jindal never will allow that without offsets elsewhere and would have no
compunction in sending the Legislature to a special session to redo the budget without
those terms if it came to that. More likely, the Senate restores the funds and
the scenario repeats from previous years.
If the “hawks” wish not to neuter themselves again, they can have some
impact without abandoning their jihad.
The portion of nonrecurring one-time money covered by the rule, much higher
than in previous years, appears
to be about $144 million. They could present a plan that eliminates that,
shunting those dollars to affect some nonrecurring expense such as the unfunded
accrued liability of pension funds and/or eliminating them to some degree or
entirely, while voting to approve the recurring portion into the budget. That
way, they stay under the symbolic $199 million limit and the $144 million
amount is something tractable by just two changes: repealing by the end of 2013
both the motion
picture investor tax credit and the solar
and wind tax credit. A half-year without the highly wasteful film and green
credits would eliminate most of that nonrecurring amount and could not be
presented by Democrats as a tax increase on anybody; in fact, it would appear
as removing a presumed wealthy constituency from receiving tax benefits.
Whether they would take this alternative is another matter, for it implicitly
would admit that recurring one-time money is acceptable for use – as it is by
definition, for there’s nothing “one-time” about it; this money comes in
regularly and predictably from statutory sources guaranteeing its appearance,
and in excess of its genuine need to which it is dedicated. Only semantics from
bookkeeping definitions allow it to be termed “one-time” money.
But, because the “hawks” have too much emphasized the symbolic aspect
of budget reform rather than the substantive – which would entail tackling the
disease through widespread elimination of dedications, evaluating what
expenditures truly are necessary, and then matching the amounts and kinds of
these revenue-raising tools to achieve this amount rather than simplistically
declaring anathema to the product of the symptoms – they have put themselves
somewhat into a corner. By pursuing this kind of deal, they may pay a political
price in being called inconsistent and less serious – a tremendous irony because
their approach of putting the symbolic before the substantive was itself a less
serious approach to solving the problematic fiscal structure of the state.
2 comments:
Folks in Shreveport:
Your local (loco) Professor is still preaching killing the tax credit that has directly and singularly lead to a thriving new business in your area - the entertain and movie business.
Do something about it!!!
Headline: Local Taxpayer-Funded Tenured University Professor Uses State Time and Resources to Urge Dismantling of Entire Private Industry and Accompanying Jobs.
"What the hell; I got mine," professor shrugs when asked for comment.
(Full story on page D-26 underneath "Hi and Lois".)
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