The conclusion of the Louisiana Legislature’s special session last week merely set the stage for a regular session of dueling fiscal philosophies to come.
The question of whether to use money from the Budget Stabilization Fund, commonly called the rainy day fund, dominated the session. All bills to erase the state’s $304.2 million general fund deficit depended upon agreement by at least two-thirds of each chambers’ members on how much money to withdraw from the fund, which is essentially a state’s savings account intended to tide government over in hard times.
On the one hand, fiscal conservatives among the Republicans wanted to take out none. They saw removing any money as a crutch preventing the state from making hard but necessary choices about what government should do, and how much citizens should pay for it. Leaving the rainy day fund untouched, in this view, would sharpen the focus on protecting taxpayers and identifying genuine public needs.
On the other hand, big-government advocates like Democratic Gov. John Bel Edwards fought to remove as much from the fund as he could in order to avoid spending less. When budgets are cut, after all, they're less likely to return to their original size, and for fiscal liberals, bigger government is always better government.
Compromise seemed inevitable, even as the moral case rested on the side of draining the fund as little as possible. Those who wanted to tap the rainy day fund to its legal limit advanced the fictitious argument that every cent would be used for some vital purpose, unrealistically assuming that the governor and lawmakers couldn't otherwise set priorities and advance a state government that lives within its means, as many Louisiana residents touched by joblessness and an indifferent state economy have had to do with their household budgets.
But more than anything, fiscal prudence argued for using as little of the rainy day fund as possible. If the maximum were to be used, the state couldn't tap the rainy day fund at all next fiscal year, when even more budget challenges loom. With yet another fiscal winter on the horizon, why act like a grasshopper now? Cutting the budget now rather than propping it up with rainy day money actually creates more breathing room to address future challenges in the budget cycle.
In the end, the compromise decision to withdraw $99 million from the rainy day fund went to the high side of the fiscal options. A companion resolution that instructs the state treasurer to investigate the possibility of using money from dedicated funds to help pay off debt, which would free up three percent more of the general fund for operating expenses that could compensate in times of deficit, was really just a fig leaf offered to the fiscal hawks. In reality, the resolution has no teeth.
Since tapping the rainy day fund requires a two-thirds vote of the Legislature, lawmakers should have used their leverage greater cuts to the budget. However, they have the same leverage concerning net tax increases appearing under the guise of fiscal reform likely to surface in the regular session. Since budgeting then won’t proceed under stopgap conditions, they might find more allies interested in paring government to a level more to their liking.
Jeff Sadow is an associate professor of political science at Louisiana State University-Shreveport, where he teaches Louisiana government. He is author of a blog about Louisiana politics, www.between-lines.com, where links to information in this column may be found. When the Louisiana Legislature is in session, he writes about legislation in it at www.laleglog.com. Follow him on Twitter, @jsadowadvocate or email email@example.com. His views do not necessarily express those of his employer.