The relief some hoped would materialize did this week for Louisiana, but the bonus must be spent wisely in a manner that eventually shrinks government.
The state’s Revenue Estimating Conference this week determined that the state would have $130 million more for this, fiscal year 2024-25, and $139 million more predicted for next year, FY 2026. Policy-makers around the capitol had hoped to hear that the previous December projections had undershot what would be actual and forecast performance, but until now faced uncertainty with a raft of tax code changes kicking in at the start of this calendar year.
As these numbers didn’t apply to previous fiscal years (the other REC meetings throughout the year often take a look back into the just-completed fiscal year) which would be declaration of a surplus, the REC had the option to declare the additional revenues as recurring for this current period and obviously for the next, which it did. That means anything goes as far as expenditures, if even spent, as opposed to tagging these as nonrecurring where only specified, essentially one-time, expenditures could occur.
But that doesn’t mean anything should go. Particular attention for the final destination of these funds should focus on the recent budget decision to extend stipends to educators that represent a one-time cost in FY 2026 of just under $200 million. Given the machinations of proposed constitutional amendments, still wending their way through the legislative process, a stable and recurring funding mechanism to make the stipend into a permanent pay raise won’t come into being until FY 2028 (or perhaps with maneuvering the back half of FY 2027) – and not even then if the amendments don’t pass voter muster into the Constitution. Thus, an unstable mélange of money, a good chunk of it one-time in origin, was cobbled together for the FY 2026 stipend, with no certainties for a potential FY 2027 stipend.
The new-found funding could prop up the stipend. In particular, to come up with the scratch $92 million in capital purchases was slated to be delayed as well as dumping a $30 million intense tutoring program for students. Also, for other reasons early childhood education subsidies were pared back to the tune of $9 million. Restoration of these items with the FY 2026 bounty makes sense.
However, some of the funds may be spoken for, as a result of a self-described “drafting error” that occurred among the tax code changes at the end of last year and the failure of an amendment whose language can be inserted into statute. If so, some of the capital purchases could be delayed to restore the tutoring and subsidies if the actual amount available drops to an estimated $60 million.
As for the FY 2025 bonus, aside from further complications like these, this should go towards reducing future commitments, principally through debt and unfunded accrued liabilities pay downs. This would constitute a superior approach to financing capital outlay projects because these actions would free up recurring dollars used to put the hoped-for educator stipend for FY 2027 on more solid footing and to provide a buffer for the future. That’s because for FY 2027 and beyond the two economists that present estimates to the panel voiced high uncertainty about future conditions, given the national and to a lesser degree state policy environments undergoing a higher degree of flux than typical.
So, it seems the gamble over the stipend will pay off, and the discovered bucks if used wisely can shore that up and set a firmer foundation for the future. Certainly, new commitments are unwise.
No comments:
Post a Comment