Not that legislators or Gov. Bobby
Jindal had an easy task at hand. The FY 2015 budget the day it went into
effect started
about $1 billion short, or four percent, for FY 2016. This did not count
known spending growth demands (such as in health care driven by federal grant
strictures) nor subsequent coming up short in forecast revenues (about $275
million worth), largely because of the steep decline in the energy sector
(although almost half of that was recovered by an unseen surplus developing during
the session).
In previous years, funds sweeps – where
monies for a particular purpose had pooled but lack of the need for which they
were intended built up their balances then made accessible for other purposes
by appropriation – had made up much of the imbalance. But this year, a
combination of the larger size of the deficit plus the deterioration of these
funds’ positions (such
as with the Medicaid Trust Fund for the Elderly, which was depleted in time
for a constitutional amendment to kick in locking in reimbursement rates for
nursing homes funds for which had been drawn from the fund) made this strategy
unable to close the gap entirely, with only around
$135 million sorted out this way.
So, policy-makers opted to raise
taxes around $761 million, with just over $100 million of that in effect
basically only for this year and all but about $100 million more due to expire
by the end of decade. These came in the form of reducing amounts that often
came in refund form beyond tax liability, but some also that affected actual
liability. However, roughly $400
million more besides the termination of the two tax exception suspensions essentially
after this fiscal year remains uncovered. If nothing else changes, including an
unrealistic standstill government in areas like health care, this means that the
decidedly higher taxes continuing into next year plus funds sweeps still may
not produce enough revenue to pay for all of the spending presently believed
needed.
Changing this dynamic first begins
with the recognition that Louisiana
does not have a revenue problem, but a spending problem. In constant
dollars, in the first decade of the century it saw a 63 percent per capita growth in spending, by far
the most of any state, leaving it by 2013 ranked 22nd in per capita spending. At the same time, over
that period it had the lowest aggregate tax burden of any state. Simply, for
the level of taxation citizens demanded, government spending has outstripped
that. The question remaining is whether they expect more than they are willing
to pay, or if it is poor decision-making that induces wasteful inefficiency
into government, or both, and if they are willing to pony up more of what they
earn to reach some level of spending they desire regardless of the cause.
A second facet additionally demands
addressing, that, after the actions of this year’s session, now fully 86
percent of spending is dedicated somewhere (this includes federal funds and
self-generated revenues, which always are tied to a certain purpose), leaving a
scant $3.5 billion not locked in somewhere, making that amount about
as much as is dedicated now by statute. Unlike constitutional dedications,
which require amending the Constitution, these may be undone by changing the
law with legislative majorities. Having so much dedicated contributes to
inefficiency in matching resources to needs, leading to the question of whether
all dedications truly are necessary and to what degree.
And, finally, as part of that,
while altering tax exceptions made up a large part of the past session, choices
made with these lacked coordination or even rationality, with hacking – or not –occurring
in areas most convenient and political, not with any systemic study of these
costs and benefits. This approach did not answer whether those that exist are
cost effective and/or serve an important non-pecuniary purpose, although the
Legislature managed some progress upon its passing of HB 749 by
state Rep. Roy
Burrell that would launch a review of tax credits.
To answer these questions, only a
radical overhaul of the state’s fiscal structure can suffice. Each announced
candidate for governor has declared an intent to call a special session soon
after inauguration to address fiscal concerns, and that can serve as the
vehicle to accomplish this. All need to commit this additional gathering of legislators
prior to the regular session to discovering state spending levels congruent
with the people’s tax willingness, ranking needs only on the basis of
priorities and not just going along with what’s in place, and what sensible
and/or vital mission-performing tax credits need retention and/or alteration
that can serve as a springboard for a far less-complicated, exception-ridden
tax code the raises revenue efficiently. If required to amend the Constitution as
part of the solution, that may happen during the spring election date around
the start of the regular session.
Failure to follow this course of
action risks putting the state right back to where it was in this year’s
budgeting, another year of inferior fiscal management, and a continuance of
chronic underserving of the citizenry.
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