For fiscal year 2010, the state took a dip out of the Budget
Stabilization Fund, better known as the “rainy day fund,” to shore up the budget
for that year. The problem was, under the BSF’s rules, it essentially
required repayment during that fiscal year. That inconvenience was worked
out by statute, essentially resetting the rules going forward. The unusual situation
was that with sufficiently high mineral revenues that would force money into
the BSF when it was below its cap of four percent of total most recent past state
revenues, even as there was a declining state revenue picture, so the reset
suspended repayment under those conditions.
But the problem with that was statute cannot override the Constitution,
and some spoilsports sued to reinforce that reality. Meanwhile, lawmakers and
Gov. Bobby
Jindal hoped in 2011 to amend the Constitution to erase the conflict. That
would have opened up the BSF to more trivial uses, and voters wisely rejected
that. A court
eventually initially sided with the statute, prompting the state to take
another helping out of the BSF for FY 2013. But policy-makers realized that
judgment was unlikely to survive informed judicial scrutiny, so the next year,
this past spring, into Act
420 went language undoing the fix for the beginning of FY 2016.
The REC most recent adopted forecast for FY 2016 expects an extra $433
million in revenues compared to this year, FY 2014. The latest
estimate of the money to be paid back is in the $330 million range, leaving
only little more than $100 million in cushion. But the baseline budget
projection for the next five years put out after the session by the Division of
Administration predicts this would be more than eaten up by $1 billion. That is,
given the current rate of spending increase adjusted by future legal changes,
by FY 2016 the state will be spending a billion more dollars from its resources.
Throwing the payback on top of this puts the actual deficit then close to $900
million.
Keep in mind that the baseline includes such things as Jindal Administration
health
care reforms already saving well over $200 million annually. Making
government operations more efficient will go only so far. Assuming that will
not be, and likely not even come close to, bridging the gap, and that revenue
projections should not increase dramatically, then only a combination of
spending cuts and tax changes, by raising them and/or reducing exceptions, can
erase that shortfall.
More interestingly, only spending cuts could be considered prior to FY
2015, because regular legislative sessions in even-numbered years, as in next
year, cannot increase taxes including through excising exceptions. Further, because
the 2015 session occurs mere months before state elections, this provides a
further disincentive for tax increases that invite voter retribution, and the
dismantling of tax credits, exemptions, etc. that might activate special
interests and other constituents to launch vendettas of their own against
elected officials.
One potential strategy to mitigate might be the object of the bill this
past session, a funds sweep. That’s possible, but given the enormity of the gap
this cannot be used to make it all up. Nor could a repeat of the original
action that wound up elevating the crisis – drain the BSF – occur, because that
may happen only with a reduction of revenues from state resources, which is not
forecast.
2 comments:
Another patently unconstitutional statute passed under and signed by out Governor.
Ah, the Rule of Law, where did you go?
Please come back soon!
Just FYI for those who want some real truth tied to your last paragraph. The only attempts to wipe out NGO spending has been by those "big-government fiscal hawks".
Jindal Administration was happy to see those attempts crash and burn in 2008 and 2010. They like NGO spending, with line-item veto powers. Enables vote-buying.
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