Search This Blog


Divided LA govt budgetary impasse not an option

As the year closes and with Louisiana preparing to embark upon divided government for the first time in several years (and a dozen since a governor of one party opposed a legislature firmly in the hands of another), could the tumult in Illinois and Pennsylvania serve as a forecast for what may come with next year’s budget?

For half a year now, both of those states, whose fiscal year begins like Louisiana’s on Jul. 1, have operated without a budget. Pennsylvania’s Republican-led legislature just sent one to its Democrat governor who item-vetoed a decent-sized chunk of it, while Illinois’ legislature led by Democrats haven’t tried in the face of veto threats from its Republican governor.

But it is unlikely that these events will replicate in Louisiana starting this summer, largely because of constitutional and legal differences among the three states. Pennsylvania actually has measures legally in place, as its Constitution does not restrict the time limit of appropriations, to tide over the state in such circumstances, as has commonly happened over the last decade. Nor does Illinois have such a time restriction in its and it also allows short-term borrowing to cover a portion of state expenditures. Keep in mind as well that both have full-time legislatures who can work on this matter every day while Louisiana like most states has only a part-time legislature that must meet in extraordinary (special) or emergency (a stretch for this purpose) session to deal with any unfinished (or unanticipated) business.

By contrast, Louisiana’s Constitution allows no such slack. The state may spend only with appropriation and these may last no longer than a year. Except for emergencies, where it would take extremely creative argumentation to say a budget impasses qualified as one, the state cannot borrow to fund operating expenses. Even if officials could strain credulity in authorizing emergency rule, that would take two-thirds legislative majorities in any event to appropriate.

Of course, at the margins the state possibly could still pay its bills after Jul. 1 without appropriation bills. If agencies had reserves, they could spend them and try to claim they covered expenses prior to the end of the previous fiscal year. Agencies that derive substantial portions of revenues from self-generated funds could play a shell game with those funds as well. The majoritarian branches also could engage in gamesmanship by passing separate appropriations bills for funding government in ways in which they agreed, despite the Constitution saying that the general appropriations bill must address the ordinary operating expenses of government.

However, none of this would allow state government to survive past the first payroll period, where around $250 million goes out the door, and, depending upon the vagaries of bond interest payments and redemptions, hundreds of millions more dollars also would need payment within a month. A piecemeal funding strategy could delay the inevitable, but regardless there’s simply no way any such kind of standoff could continue longer than a matter of weeks, and certainly not months all the way into the new calendar year.

That means when the new Legislature and governor get together next year, they have to get it together as far as the budget goes. Unlike a few exceptional states, little margin for error exists in operating state government unless they do.

No comments: