On the heels of the production of
the state
budget for FY 2014, which gives expenditure totals close to what actually
occurred from July of last year through
this past June, revenue estimates as of now made by Gov. Bobby
Jindal’s Division of Administration show this surplus. Final numbers won’t
be in until the end of the year, but this should not drift much lower. Shortly
before then, the Revenue Estimating Conference will meet to produce the
official numbers that may be used for budgeting for FY 2015 next year.
Any leftover surplus can be used
for just a small selection of purposes, all of which deal with long-term
expenditures. But even as legislators mused about what to do with it, state
Sen. Jack Donahue had the right idea
from the eligible purposes – put the money into the Budget Stabilization Fund,
the state’s savings account that can be used to offset state-generated revenue
declines – even if he and the state really have little choice in the matter.
That’s because, through a
complicated series of events that skirted constitutional requirements, the state
must pay back around $330 million into the fund by FY 2016 – this present
and the next fiscal year. Another like surprise next year made through
conservative budgeting and forecasting would clear that debt.
Whether that might happen is
another matter. While job growth no doubt contributed to this bonus, considerable
evidence points to much of it being a product of a variety of tax increases
inflicted upon America by Pres. Barack Obama
and congressional allies. Given their timing, this prompted tax filers in
Louisiana to make transactions earlier than typical to recognize revenues so
that tax revenues manifested more quickly, meaning that those transactions
beggared future tax revenues. In essence, by shifting forward these revenues,
Louisiana may have put itself actually in a more difficult position, because revenues
recognized later have more flexibility attached to them.
Fortunately, other good news may
be on the way. The Jindal Administration has put particular emphasis on
operational efficiencies. For example, in its managing of home- and
community-based services the Department of Health and Hospitals before the end
of the year plans to roll out electronic visit verification technology that historical
data show usually reduces costs (by elimination of waste and fraud) by a
minimum of 10 percent. As for FY
2012 $689 million was spent on such programs, at least $35 million in costs
would decrease for the remainder of FY 2014 by this implementation.
It’s these kinds of efficiencies
that will have to suffice to prevent other spending reductions, as revenue
growth will continue to suffer for the next couple of years due to the
Obama-inspired non-recovery of national economic performance. Further optimism as
reflected in a university
forecast specifically about Louisiana (one author of which sites on the
REC) shows it might suffer this slow growth less than most states, but the fact
is whatever revenue surprises may come already are spoken for on behalf of the
BSF.
This will create an interesting
political pressure on the December REC meeting to overestimate revenues for
this year, in order not to entrap them for BSF use by going lower, increasing
any future surprise that then must go to the BSF. However, this would counter
to the general tendency for the two entities involved, DOA and the Legislative
Fiscal Office (the REC usually chooses one of the two forecasts in whole), to
underestimate revenues during slower growth periods (and to overestimate them
during periods of higher growth rates, because they have difficulty in gauging
the exact inflection points). Policy-makers representing the governor and both
legislative chambers who sit on the REC also might shy away from this, after
the last three years of revenue estimates falling short and public complaints
about that.
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