Who’s afraid of big, bad one-time money? A lot of Louisiana policy-makers, unnecessarily.
The phrase refers to dollars spent on a government activity from a revenue source not authorized to fund it. It requires approving a legislative instrument to transfer the money, and past governors and legislators have used it with regularity to avoid spending cuts.
Democratic Gov. John Bel Edwards insisted during his successful campaign that he wouldn’t rely on on one-time money into his budgets but, expressing regret, has forwarded to the Legislature during its special session spending plan adjustments chock full of such money. In turn, many Republican legislators claim they should employ this tactic only under duress, and some swear off it completely.
But despite its bad reputation, using some one-time money makes sense. Understanding why begins with the knowledge that the term “one-time money” encompasses several different funding sources.
A portion does take the form of truly bonus bucks. For example, Edwards’ plan envisions taking almost $4 million from a settlement procured by the Attorney General’s office that partially funds its operations. The one-off event that produced these funds will not recur.
Another kind represent postponing work on projects or bill payments. For example, Edwards wants to delay using more than half a million dollars allocated to fund improvements in the way that people with disabilities are matched to services, shuttling that money to cover the deficit. Eventually, unless the initiative is cancelled, the state will probably spend this money on the disabled in a future year.
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Finally, some one-time money essentially recurs. The state has hundreds of dedicated funds into which money pours, often in amounts greater than actual required spending needs, much less whether the need really is that important compared to others. Further, these excess dollars accumulate over the years, creating pools of money paid in by the citizenry directly or indirectly that otherwise would sit idle unless converted into one-time money by transferring some of the proceeds elsewhere. For example, Edwards’ proposal seeks to vacuum up around $100 million lying fallow in many different pots to resolve the shortfall.
While bonus money and postponed dollars ideally should not fund operating expenses, largesse from taxes and fees should invite prudent policy-makers to use this money in advancing more important purposes. An even better approach would tackle the crazy-quilt of special funds to reduce the annual misdirection of significant sums away from real needs.
House Bill 5 by state Rep. Rick Edmonds makes an effort to achieve this rebalancing. It eliminates certain accounts and detaches funding pipelines from these accounts and others, rechanneling those bucks into the general fund, where each year the Legislature can decide to appropriate the money for its former purposes or for more important functions.
While one may quibble over a few of the bill’s targets, it gets the ball rolling, and its general idea desperately needs amplification. If the bill becomes law, lawmakers should liquidate the taxes and fees once attached to purged dedicated funds. Moreover, if they wish to maintain revenue neutrality, they can adjust upwards marginal income, sales, and excise tax rates.
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Any discussion of fiscal reform must include streamlining the hodgepodge of dedicated funding that makes the state appear to have insufficient resources to cover major needs when, in fact, it merely suffers from revenue misallocation. Rather than raise taxes, until policy-makers find the courage to put into law HB 5 and other measures extending its concept, they must learn to live with and love sweeping one-time money to places of more sensible use.
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.