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Edwards wants taxes, spending over reasonable cuts

Monday the Louisiana Legislature closed out another regular session, amid a sanctimonious attempt by the Democrat Gov. John Bel Edwards Administration to resist using tens of millions of dollars in available funding for spending it claims has high priority in favor of future efforts during the just-commenced special session to raise taxes.

After careful reading of the Constitution and statute, and with the concurrence of Republican state Treasurer John Kennedy who in the past came to the same conclusion independently, Republican House Speaker Taylor Barras will wish to have included in the budget, and forwarded a resolution to Kennedy to confirm, that the amount will flow into the Bond Security and Redemption Fund from dedicated sources, freeing a like amount for use in operating expenses. Most non-self-generated revenue sources in the state must flow into the BSRF, a device to collect funds prior to their distributions to their assigned accounts, to ensure that sufficient capital exists for debt payments.

In essence, at the end of the regular session the House identified $74 million in spending attached to relatively lower-priority functions of state government and instead of passing it through the BSRF to its designed destinations would shunt it to debt service. That would add that amount of available cash otherwise allocated for repaying debt to the general fund for spending elsewhere.

Edwards Administration officials decried the use of money in that fashion, declaring it a problematic “funds sweep.” This budgetary tactic, honed over the last dozen years, has appropriations bills passed to redirect money out of funds attached to certain uses to other places, from uses generally considered lower in priority to those deemed more necessary. This in part addressed the structural inflexibility of the state’s fiscal structure, which shovels now over 85 percent of all state spending into predetermined uses without any effort to make priorities among these nor to determine whether the amount of money that stacks up for those uses really matches the necessity of each.

Sweeps got a bit of a bad rap in recent years because they became a form of deficit spending, where large balances in funds the actual need of which required just a fraction of the dollars rolling in on an annual basis found themselves drained. As in many cases the amount removed each year for the function plus that swept out drew down the idle balances, eventually this became less and less practical an approach. It represented a natural compensation for poor decisions made in creating many dedications, but could serve only as a short-term measure. The Gov. Bobby Jindal Administration particularly hoped economic conditions would improve to end this reliance while avoiding economically-crippling tax increases.

That never happened because of the economic mismanagement, whether intended, of the Pres. Barack Obama Administration that has produced the worst recovery since World War II, even as Louisiana’s performance under Jindal outpaced the country’s as a whole. The Barras plan differs in that rather than tapping unused cash from funds, it serves instead as a cut to spending in certain dedicated areas.

So the Edwards Administration misinforms when it declares such a move as a sweep – as if fixing misallocations inherently constituted some kind of problem; sweeps become problematic only when relied upon too heavily. But it takes on a hypocritical tone when questioning the validity of the perfectly legal process involved and funds released as it already has cooked in some funny money to its budgeting.

That comes courtesy of the sham “savings” allegedly derived from Medicaid expansion. As previously noted, these figures rely upon fantastically unrealistic assumptions, yet with a straight face Administration officials proffered them as real numbers for budgetary purposes. In actuality, ultimately if used they likely will throw the balance hundreds of millions of dollars out of balance over the next fiscal year.

But that’s all right because these serve to buttress an unsustainable worldview. Meanwhile, because the Barras option contradicts Edwards’ ideological imperative of growing government for redistributive purposes, that he must oppose regardless of the soundness of the idea.

The battle may not end regardless of the end of the regular session. While the final operating budget did not include the $74 million, the special session call allows for budgetary adjustments, and so usage of funds from this source may continue as a source of contention over the next couple of weeks. That will test the Edwards’ Administration’s single-minded focus on hiking taxing to expand state government’s redistributive potential – even as public opinion rejects that approach in favor of House Republicans’ ideas of cutting spending, as exemplified by the Barras approach.

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