So the state lost track of around
$320 million starting in 2002, and it’s out there available to be spent.
Whether that means the state won’t need to reduce services over the next few
months is another matter.
By Aug. 15, the state knows its
funds inflows and outflows from the previous fiscal year ending Jun. 30, and
reports these results in early October. Part of the revenue side of the picture
is money taken from dedicated funds transferred to another agency for use and
self-generated monies by agencies assigned to specified uses. But apparently
since 2002 if any excesses existed after transfers or generation, unused for
their intended purposes, they lay fallow. Now the Gov. Bobby
Jindal Administration wishes to put them to work, especially as without
those leftovers fiscal year 2014 resulted in about $141.5 million of outflows
over inflows.
Constitutionally, after Oct. 15
the administration reports
to the Joint Legislative Committee on the
Budget on the status of the previous year’s actual figures. If a deficit is
declared and the JLCB concurs, this allows the governor to impose mid-year
budget cuts to make up the previous year’s difference. It’s something
policy-makers rather would avoid, which has seen since
2008 $1.122 billion in such cuts, with FY
2014 being the first since then not to have any.
Historically, the presumed $141.5
million figure would have to trigger some; if about $100 million fewer usually
executive orders and shuffling of accounts can cover the difference. As it
turned out, the JLCB
acted as if there was no deficit, but members expressed they reserved the
right to change their minds in future months, with many targeting the end of
the year when their Legislative Fiscal
Office has to come up with totals in order to give direction to next year’s
budget, so that the Revenue Estimating Conference can come up with baseline
totals on which budgeting may occur for FY 2016.
Adding to the confusion is
whether how much of the $320 million can be used to cover any or all shortages.
Two factors potentially limit this: that some of the surpluses may have legal
obligations tying them to certain uses that are not in deficit, making them
unavailable, and that of those that may be used for a specific purpose in
deficit or generally, the fact that it seems they would have to be declared by
the REC as nonrecurring in nature, being a kind of bonus, and thus not
available to pay for previous deficits made by spending on recurring items.
The latter actually does not pose
substantive difficulty, for the state can use the same strategy it has in the
past to render nonrecurring funds for recurring use, most
recently last year: as one of the half-dozen permitted uses of nonrecurring
funds is to reduce debt, to pay off bonds scheduled to be during FY 2015,
thereby freeing funds appropriated for that purpose for other uses. The former
provides the constraint, for if the LFO’s due diligence does not find that at
least $141.5 million of the entire amount can go to making up a shortage in a
particular area and/or is generally available, then the difference of what can
be from that figure equals a deficit.
It is entirely likely that in
some form the eventual amount will get verified at least close enough to that
figure and usable for debt defeasance so that shuffling around can repeat for
FY 2015 what happened in 2014, if not go over. Still, on the off chance this
doesn’t happen, the risk for the JLCB in waiting and in the end discovering a
deficit rather than deal with it now is that this leaves just a half-year,
rather than almost three-quarters, to deal with it; in other words, the same
amount of money must be cut in less time, making such cuts more disruptive. And
this isn’t in a static environment: if FY 2015 revenues run lower than expected
and/or expenses run higher, by year’s end not only might a prior FY 2014
deficit need dealing with, but a current FY 2015 one may need addressing, too.
Alternatively, the dynamics may be such that over that time a FY 2015 surplus
may emerge, which then could be shoveled into closing any FY 2014 gap.
By waiting on any action, the
JLCB does run the risk of allowing the situation to deteriorate. Yet with more
time, additional clarity and favorable trends not only may provide a solution
to there being a deficit as traditionally measured, but also may produce a
bonus. Especially with an election year on the horizon, no politician wants to
authorize cuts that could produce reductions in services, so that may have
influenced its decision to not act. All we know is that there’s money available
that could cover this shortfall, and then some, or maybe not.
No comments:
Post a Comment