Search This Blog


Dynamics favor smaller govt advocates in budget tussle

The Louisiana House and Senate continued its weird mating dance over the budget, narrowing issues down to just how much will come out from the Budget Stabilization Fund after the House resoundingly rebuked the Senate’s strategy of raising taxes just recently lowered. With all matters of extracting more money from the people set aside, the main issue now is how much is to come out of the Fund and what does this mean to the size of government?

After the House ejected the tax increase, the Senate went ahead and amended HCR 236, the enabling resolution to draw on the Fund. The House wants only a little over $86 million, in large part because it is believed though HB 720 that creates a tax amnesty enough money will be hauled in from that to replenish that which gets taken out of the Fund. The Senate wants more, an even $204 million – note the difference is almost $118 million, the money promised to higher education to offset cuts totaling $219 million for next year. The difference sent the instrument to conference.

There it joins HB 802, which contains mainly funds transfers but also an appropriation for $118 million for higher education and a reversal of a transfer of a fund designed to attract insurers that by another piece of legislation was to have been put into the general fund, both Senate amendments. The Senate conference strategy will be to bargain for the $76 million in the insurance fund for the $118 million extra in the “rainy day” fund.

But now the House’s hand has improved over last week, when its interest in this bill was much greater than the Senate’s because now this is the Senate’s only vehicle by which to pry loose at least the $86 million the House has since volunteered with all other options closed. Neither can afford to let the bill founder because of the funds transfers, and if the House just let it go as is it would actually involve less spending if it also let HCR 236 expire (118 – 76 = $42 million). The problem is the money would not be going the places it wants nor is the actual draw from the fund in place, so a deal must be made.

That determined, if there’s real hardball involved on the House’s side it could say it will accept the $118 million and creation of a fund to send it to that supposedly would send it to higher education expenditures if the fund raid is not reversed, and then depend upon its backstop Gov. Bobby Jindal to veto that line item. The Senate will want assurances that will not happen, but it needs the bill, too, and likely will try to stake out some middle ground in terms of amount to avoid being put in a situation where it can be double-crossed.

Further strengthening the House’s hand is the current posture of HB 720. The only difference between the chambers with this instrument is the House version directs as much of the available revenues from the amnesty as possible to higher education while the Senate, to get leverage for its vision of funding this area, stripped that provision. The House could simply concur on this and HB 802 and HCR 236 with the Senate’s promise of not reversing the insurance fund draw. This would create a much bigger draw on the Fund than it wants, but then the proceeds of the amnesty are left unappropriated past constitutional requirements, which works in the favor of the House and Jindal because the first place they could go would be back to the Fund. In other words, acceding would create only a temporary draining that could be replenished to the level the House and Jindal prefers.

However, note that the Senate has every incentive to play hardball here as well, not because of the superior mechanisms at its disposal, but because so much of their political capital is on the line. Almost 30 senators, some nominally anti-tax, made themselves politically vulnerable by twice voting for tax increases. If they get at least some additional funding to higher education, they can claim they had to adopt extreme measures to reach this payoff and successfully. But if there is no payoff, or at least not any way to argue there is one even if substantively there is not, they will look quite foolish.

This has come down to a contest of wills because of a fundamental difference in belief about the appropriate size of government between Jindal and the House majority, and the Senate majority, where the latter believes government should be larger than the former. Given the constitutional, legal, and procedural structures of the state and its governing institutions, unless the former group loses its nerve its preferences are going to triumph in the main.

No comments: