Thumbs up on two, down on pair of LA amendments
Even though only four constitutional amendments appear on Louisiana’s fall ballot, ten fewer than last year, that’s still enough to have one very controversial one appear.
That would be the first, which deals with the Budget Stabilization Fund, the savings account of the state. In essence, bonus revenues, both those in excess of the state’s constitutionally-determined expenditure limit and including a quarter of all nonrecurring monies, that accrue to the state, mineral proceeds above the base level, and whatever else the state wishes to throw in, up to a maximum balance of four percent of the state’s budgeted revenues at the time get chunked into the BSF. The base level, which may be readjusted at minimum every ten years, recently became $950 million, with the BSF holding $517 million and its ceiling currently set at $811 million. Money removed must be filled at the next available opportunity.
Amendment #1 would divide the BSF into two sub-funds, its original one and a new Transportation Stabilization Subfund. Each would be capped at $500 million, with the new one to have money flow to it from excess mineral revenues after the new Budget Stabilization Subfund. It also would delay at least a year any refilling of the new BSS, with the same applying it would appear to the new TSS, and the base level could be raised after five years (monies in excess of the base level and subject to the delay could be spent on operating expenses). The TSS could have proceeds spent generally on transportation projects, although some would be dedicated.
This commits a multitude of sins, the foremost being it perverts the intention of the BSF, where a third of it may be drawn out to assist in operating expenses when state revenue sources are lower than in the previous fiscal year. That would limit the BSF to at most a $166.6 million contribution, an amount that does not grow as does the budget. This reduced level prevents thriftier planning in times of plenty or when bonuses come that could help more when needed in the future. Instead, it becomes just another dedication that already has close to 85 percent of the state’s budget locked into certain expenditures, creating inflexibility that causes cuts to needier programs than often get funded.
As such, this amendment merely sets up a raid on the BSF that may cause credit rating agencies to rate Louisiana debt less confidently, which in turn would increase borrowing costs. There already exists a Transportation Trust Fund that supplies money for roads from fuel taxes, but a portion of that can be spent on operating costs of the state police and also goes to parishes. Instead of corrupting the intent of the BSF, if legislators want more money for state road needs, they could amend out the parish allocation and/or not siphon any of the balance to the state police. Further, help is on the way as beginning in fiscal year 2017 motor vehicle fees collected up to $97.9 million a year will flow into the TTF (as long as there has been an increase in all mineral revenues from the previous fiscal year).
Thus, to protect the integrity of the BSF, Amendment #1 needs defeating. So does Amendment #2, which funds a state-run infrastructure bank from which local governments could borrow money to finance transportation deals. The Legislature can fund it optionally, and up to $2.1 million of the money from motor vehicle fees can go in it starting in two years. This amendment would give the state treasurer the option of using free cash as capital for lending to local governments, instead of investing these balances in other ways, such as on equities or other kinds of debt instruments.
However, this not only presents problems in that a substantial sum would have to accrue for it realistically to lend and also would cost a small amount operationally, but also allows politics to creep into the capitalization process. An elected official would decide whether to fund it, without any other oversight, and there’s no guarantee that those decisions would not occur more on criteria such as favoritism or progressive ambition than on sound investment practice.
By contrast, the relatively innocuous Amendments #3 and #4 can pass without real damage to the public weal. The former changes the definition slightly of what constitutes a “fiscal” bill, broadening that to include measures involving tax administration, instead of a more restrictive current list. This matters as every other (even-numbered) year, only five “general” bills per lawmaker may be considered in a session of the Legislature, so this would have the impact of allowing more of those kinds of bills in those sessions.
For the latter, it concerns a passage in the Constitution that says “public” lands or properties are not subject to property taxation. A recent appellate court decision went against decades of Louisiana Supreme Court guidance on the subject to expand this meaning to out-of-state governments, and the amendment would make specific the exemption applies only to Louisiana governments.
While my colleagues at the Baton Rouge Advocate advocate that the amendment deserves defeat in order to let the courts sort it all out, policy-making should be left in the hands of the people and their elected legislators, not decided by courts. Further, the clarification seems in the public interest, so as on #3 a vote should be registered in favor of #4 as well.
Posted by Jeff Sadow at 11:30