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17.6.07

Budget train wreck better than Blanco intended course

While some may disparage the emergence of a “train wreck” over a portion of Louisiana’s budget to be decided in the next couple of weeks, given certain circumstances, that may be the most desirable option.

The “train wreck” is the scenario where House Republicans stay mostly solid in their opposition to raising the state spending cap, increases pegged by the Constitution matching the growth of the private-sector economy, which would slash $1.9 billion from the Democrat Gov. Kathleen Blanco budget. The cap can be raised only by a two-thirds vote and over half of the GOP members, about two-thirds of the total needed, have pledged to block that raising unless significant tax cuts and reductions in proposed spending increases occur.

Granted, the GOP is absolutely correct in its assessment. Blanco and her Democrat legislative allies willfully are ignoring economic indicators and common sense as well as economic theory in plunging ahead. The Republicans’ problem is that they don’t have the votes to stop the bill, HB 1, that spends too much because that requires only a majority to pass. Under a politicized interpretation of the definition of the cap, passage of that bill will not exceed it.

But implementation of the supplemental bill, HB 765, in essence will be stopped without raising the cap, which a majority of Republicans say they can live with delaying that spending until after fall elections – the “train wreck.” Most of the items in that bill have widespread support and would be helpful to the state – highways, coastal restoration, technology, and general capital outlay items being among the biggest in cost – but of the items, really only one has any potential sense of urgency to it, $447 million in funds to bail out the shortfall in the mismanaged Road Home program (which really comprise funds given to the state by the federal government).

Even this, however, is not that urgent. The program will be paying out for well over the next year, and the federal government has given signs that it will make up a good portion of the shortfall which would be several times what the state is offering in its recycled funds. The federal government could put up some funds and then tell the state it’s on its own, and the state can use those funds through the rest of the year.

The best scenario for the state would be for Democrats to accept the Republican position. The worst would be to allow all the spending contemplated in HB 1 and HB 765. If the only compromise that comes about is the spending just in HB 1 and delaying HB 765 items until 2008 – the train wreck – that’s better than the worst scenario if the best one can’t be attained.

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