While it has not received sufficient attention, given the drama over the state budget, one of the ways to deal with the crisis is once more on the table: removing dedications from state accounts.
We support it, but we also caution the critics of Gov. John Bel Edwards’ tax plans that “undedicating” various pots of money in the budget is not going to be an easy way out of a multibillion-dollar deficit problem.
Statutory dedications, or statdeds in State Capitol parlance, are laws that require the state to pay every year for specific services, or to put money into specific funds. Is it a bad budget process? Quite often, as Stephen Waguespack of the Louisiana Association of Business and Industry argues. He urges “repeal of a host of statutory funds that wall off dollars from higher education and health care.”
The Pelican Institute for Public Policy, a libertarian think tank, adds that part of the budget solution — now hotly debated between Edwards and the anti-tax leaders of House Republicans — is to “reduce or eliminate statutory dedications that wall off money for nonessential programs, like sports facilities and equine studies.”
Those are good examples, but they also illustrate one of the limits of the strategy of cutting statutory dedications: Sometimes, this is money that is not really the state’s money, although it formally goes through the appropriations process; rather, it could be industry fees that are passed by the Legislature, usually with the agreement of the industry involved, to promote something like, say, equine studies for agriculture or racetracks. Often, the dedications carve out state revenues that go to local governments — maybe even local sports facilities.
Today, there is litigation that has oozed its slow way through the courts over the Legislature’s authority to “sweep” money from dedicated funds that is, well, dedicated — and isn’t really the state general fund revenue that actually runs the operations of government.
As that litigation started during the administration of former Gov. Bobby Jindal, whom Waguespack served in several capacities, he ought to know better than most the limits of the anti-statded strategy. In a desperate search for money after Jindal’s tax cuts destabilized the budget, savings from “sweeps” and other devices never came to much more than $100 million or so — a 10th or less of the current problem inherited from Jindal’s day.
Each dedication represents a program or spending item. To say eliminating dedications is the same as cutting spending is misleading.
We also note, given the impasse between Edwards and the House GOP’s anti-tax conservatives, how little trust and cooperation the current budget crisis has engendered. Once you start suggesting repeal of dozens of dedications — each precious to a particular interest group — one enters a political minefield.
The only administration to attack the problem meaningfully was that of Gov. Buddy Roemer, who faced a catastrophic budget collapse during the 1980s oil slump. Under the pressure of a crisis, a sweeping bill eliminating many dedications was passed, and like barnacles attaching themselves to a ship’s hull, the statdeds gradually came back.
We hope that the Legislature, under today’s budget pressures, would suspend — if not eliminate — a large number of statutory dedications. We just hope, though, that the proposal is not a substitute for revenue solutions that will last.