Edwards spins to deflect from tax, spend agenda

Gov. John Bel Edwards depends upon the public missing the real story whenever investigating state finances, and he’ll do his best to deflect attention from it.

Last week, the Louisiana Legislative Auditor released its annual report on money kept at the Department of the Treasury. It noted that the total amount bankrolled (which excludes certain funds like for pensions) came to around $6 billion, a decrease from $8.4 billion in fiscal year 2013. Most of that decrease came from state investment funds, some $2.2 billion. The amount available actually had gone down to $1.9 billion in FY 2016, but recovered by a half-billion this year mainly due to $600 million in increased tax revenues.

The Edwards Administration was ready, willing, and able to spin these numbers: “The Legislative Auditor’s report on the state treasury department findings further underscores what … Edwards has been saying about the state’s budget problems. Multiple funds sweeps and other irresponsible and deceptive practices that were used by the previous administration to artificially balance the budget with one-time funds created the state’s current fiscal crisis. Those types of decisions reduced state assets held in the treasury to the point where the state had to take out revenue anticipation notes to make sure its bills were paid on time.”

This assertion contained one element of truth. In 2016, during Edwards’ first year in office, the state did issue RANs. The remainder of it served as an apology for Edwards’ tax-and-spend approach to inflating Louisiana government.

To remind, Louisiana’s straitjacket of a fiscal structure badly matches revenues to genuine need. With well over 80 percent of the budget dedicated in some form, money piles up in funds tied to particular purposes, with a good portion of this bearing no relationship to real priorities. Excess money accumulates in these pots, which without legislative authorization either remains trapped and idled or must be spent on low-priority functions while more important things go begging.

Funds sweeps free this money, where the Legislature passes appropriations redirecting the money. Otherwise, either the cash essentially gets wasted or does nothing, begging the question of why government in the first place should take this money from the people instead of letting them keep more of what they earn. With responsible sweeps, this corrects the imbalance created by policy-makers who refuse to reform the system through wiping out most dedications.

A responsible set of sweeps occurs when appropriations drain enough money so that the state does not have too few reserves to pay obligations, which vary as do patterns of revenue collection, past some minor short-term debt. In 2016, Louisiana had to issue $370 million in RANs – about a fifth of its pooled reserves (i.e., not money held as working cash or on behalf of other local governments) because of crunches at certain times. In fact, the state paid back early these notes issued in 2016 not due for interest payments until June, July, and August of this year.

But the Administration didn’t mention that even after the new revenue – most of which came from tax increases he supported that undershot predictions – the state still looked at a cash dilemma this year that may or may not require RAN use. Edwards can’t blame this on his predecessor.

Nor did his statement on the report address the audit’s conclusion that under Edwards watch state debt had continued to rise, which increased $1 billion since FY 2013. The overall level of around $6.5 billion basically barely rose after Edwards’ first full year in office, meaning he didn’t pull back on debt spending for capital outlay projects even as he complained government needed more revenues.

This behavior serves Edwards’ agenda for growing state taxation and spending. By crying that government needs more revenues while some existing revenues go into a vault, he removes artificially a means to meet some desired obligations. This creates pressure for tax increases.

Don’t buy it. The recent past suggests around $2 billion in pooled reserves leaves the state enough funding to pay bills with only minimal need for RANs. As long as policy-makers refuse to loosen dedications, funds sweeps beyond that avoids abusing taxpayers by taking their hard-earned dollars just to sit on these and injuring citizens by failing to provide needed services.

That’s the real story here, which Edwards doesn’t want the people to know. If anything, the actual irresponsibility comes from his demands for more and more when he has a perfectly reasonable solution that does not gouge the citizenry.