Louisiana’s Department of Revenue
came up with a firm estimate of what it thinks the state’s first round of tax
amnesty will hit. The $435 million figure of course must fund the $200 already
allocated, plus expenses of $78 million. And since some creditors paid in film
tax credits, which represents money that might have been paid in without these
but not definitively, as much as $67 million more represented by these could
disappear from the final total.
That leaves $90 million, and it
is in addition to a projected
surplus for this fiscal year just ended estimated at $163 million. But
given that the Revenue Estimating Conference, the state board with the
authority to determine whether the money represents recurring revenues and
therefore rules on whether it can be spent on operating expenses, has signaled
it is unlikely to declare the entire lot of it as recurring, this excess
probably will be put into the nonrecurring category, limiting its use to a
small set of items focused on capital items and long-term liabilities. While
creative accounting could try to wash that money into recurring form as
previously has been done, alerted to that possibility policy-makers risk
raising the ire of any one member of the REC (a decision must be made unanimously
or the money never can be used) by such a brazen move, so probably they will accept
its declaration as nonrecurring. Again, not using these for operating expenses
simply makes good prudent sense, especially as some good portion may have
beggared future projected revenues.
Of the small menu of choices for
these monies, Treasurer John
Kennedy has recommended
any extra dollars laying around should go towards completion of I-49 south,
intended to bring up to interstate highway standards essentially U.S. Highway
90 that goes from Lafayette to New Orleans through Morgan City. He already has
stumped for the majority of the fiscal year 2013-14 surplus to go to this, and
that additional capital outlay should be dedicated to it, as about 60 miles of
the 160 miles stretch remain uncompleted which could be done at its least expensive
for $3
billion even as that means it would still be at least a decade before
completion. Kennedy calls this an example of making good priorities.
But while such a suggestion is
good politics – Kennedy is mulling a run for the governorship in 2015 and
better than half of the state’s voters live from 25 miles south to 75 miles
north of the corridor in question – it’s not a good priority. U.S. 90 already
in most places is upgraded to a status near to or equal to that of an
interstate highway. And it’s essentially duplicative for Lafayette to New
Orleans travelers that would slightly relieve traffic congestion going over the
Mississippi River Bridge and a few miles to the south in Baton Rouge and the
corridor in Jefferson Parish. While that’s improvement, it comes at an
extremely high price, both in absolute terms and relative to other priorities,
especially as cheaper
alternatives exist.
That doesn’t mean finishing the
south segment shouldn’t be done ever, just that there should be no rush (unlike
with the alacrity concerning the north part, running from Shreveport to the
border to connect with the interstate in Arkansas that required a massive
upgrade of a two-lane road without any duplicative, alternative route). Instead,
a much higher priority item exists – fulfilling a legal requirement that the
state refill its “rainy day” fund.
Because of legal machinations
that drained money from the Budget Stabilization Fund in a way later determined
constitutionally questionable, the state is obligated legally over the next two
budget cycles to deposit $330 million into that account. If in fact the surrendered
film credits over the next two years end up that they would have shielded their
entire face value from being collected (and the REC recognizes them as such),
the surplus from last fiscal year and what is anticipated to be left over from
this year’s amnesty can pay for this deposit. Even if the returned credits don’t
get accounted in this way, future amnesty proceeds can help accomplish this.
And whatever is left over then can be put forward to finishing I-49 South.
Wrapping that up quickly is the
flashy political solution. But the prudent fiscal solution is to put that on
the backburner and use any surplus proceeds over from the past year and next
three (the amnesty provision comes into effect again each of the next two years)
to address much more pressing needs such as the BSF deposit requirement, or
perhaps next in line the unfunded accrued liabilities the state faces for its
pension systems, at $19.3 billion now (even as market
gains and state
hospital operation privatization have reduced that amount from where it
could have been, it’s a long ways to go and cost-of-living-adjustments
contemplated for those drawing them would reduce the margin for error). And
any action on operating expenses should wait until the future and regular
budgeting process when any trend of increased overall revenues that appears to
have begun becomes more well-defined.
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