For years, policy-makers have lamented the
straitjacketed nature of the state’s fiscal system. With nearly 400 different constitutional
and statutory dedications, relatively little in the way of discretionary
revenues exists. That makes the areas of health care, higher education, and
corrections rely heavily on these dollars and unprotected when general income,
sales, or excise tax revenue falls, thus disproportionately making that kind of
spending vulnerable to cuts.
While a small number of dedications channel a
large chunk of nondiscretionary bucks – perhaps the Minimum Foundation Program
serving as the best example, creating the single largest expense in state
government at around $3 billion
– the many smaller ones do add up to hundreds of millions of dollars. And among
these, no objective observer would dare to argue that a handful of them at best
should have greater priority over those three larger concerns.
But with dedicated money flowing to these purposes, the only way to divert that is through a funds sweep, where the Legislature specifically appropriates money out of a fund serving as a receptacle for the incoming money, which acts as a way station to spend on an activity but does not preclude other monies from other sources to go towards the activity as well. Otherwise, these bucks pay for lower-priority items while what should be higher-priority needs go wanting, or these lie fallow simply because of insufficient need.
Over the years, bills have tried to loosen dedications
to varying degrees, and this regular legislative session brought renewed
attempts. SB
400 by Republican state Sen. Sharon Hewitt
would abolish some funds with annual inflows of about $90 million,
with presumably their revenue-raising mechanisms still in place that now would send
almost all of that to the state general fund. In the general fund, depending on
appropriations patterns it could leverage several hundred million more in
federal dollars. It passed
out of the Senate
Finance Committee last week.
The original bill didn’t intend to do that, but
Hewitt tacked on the fund eliminations. And, as it turns out, committee
Democrats squawked about that. After suffering the trimming of a few off the
hit list, it passed with all Democrats present voting it down except for the
panel’s chairman state Sen. Eric LaFleur,
while GOP state Sen. Jim Fannin also
voted against.
The same dynamic played out across the marble
where last week the House
Appropriations Committee passed out HB 500 by Democrat
state Rep. Neil
Abramson, which would call for a limited constitutional convention focusing
on local government, education, and financing matters. Despite the bill’s provenance
and that the panel forwarded it unanimously, it caught flak from Democrats over
how it could impact dedicated revenues. Subsequently, it faced delays in the
entire chamber, presumably from lack of support likely coming from Democrats.
On the surface, with Democrats particularly
bemoaning a lack of revenues that prompted LaFleur to call the budget for next
fiscal year currently being hashed out something nobody could
vote for, it would seem strange that they wouldn’t approve of measures to
loosen dedications to find that extra cash. But to do so would contravene their
strategy to grow government.
If they can keep revenues locked away, that
increases pressure for tax increases. That desire also lies behind Democrat Gov.
John Bel Edwards’
insistence on not using funds sweeps. He says government should not budget on
the basis of uncertain revenues, which if some intentionally are put off-limits
despite being collected could be considered in this fashion.
Either way, Democrats can create a fiscal crisis by
continuing to shuttle bucks to low-priority purposes or in letting money
accumulate, then claim more revenues needed to fund the big-ticket items. Taking
more from the people and not creating a more efficient fiscal structure is their
goal, for the more resources government can consume, the more power they can
exert through redistributing larger and larger sums.
Bills like these threaten that game, and so cynical
Democrats legislators will fight to maintain the current convoluted system.
Gutless Republicans, who don’t want to absorb blame for disappointed interests
that don’t see their pet policy preferences funded, will do the same as then
they can claim their hands tied.
Together they pose stiff opposition to any fiscal
reform. It’s imperative to Louisiana’s fiscal and economic health that this be overcome.
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