At a time when the coronavirus pandemic has blown a giant hole in the state budget, conservative legislators see an opportunity to push through restrictions in government spending that have failed in the past.
Four measures approved Tuesday by the House Appropriations Committee would try to restrain state spending – which would inevitably mean less money for teacher pay, police protection, health care for the poor and housing state inmates.
“This brings us back in line with responsible budgeting,” state Rep. Rick Edmonds, R-Baton Rouge, said of his measure, which would limit the Legislature to spending 98% of the available money recognized by a state panel known as the Revenue Estimating Conference.
The REC holds an all-important meeting Monday to determine how much money the state is expecting to collect this year, with the economic collapse causing tax revenues to plummet.
Jay Dardenne, a former Republican lawmaker, is the architect of Gov. John Bel Edwards’ budgets as the commissioner of administration and is the governor’s representative on the four-member REC.
In an interview Friday, Dardenne said now is not a good time to impose limits on spending. “There’s a lot of uncertainty going forward and how quick this pandemic is going to resolve itself,” he said.
Jan Moller, director of the Louisiana Budget Project, was more blunt in his comments about Edmonds’ proposal. “It’s a gimmick that’s a bad idea in the best of times and an even worse idea in the worst of times,” Moller said.
Going back decades, lawmakers and governors in Louisiana have adopted numerous measures that aim to limit spending.
Perhaps the most important one created was the REC, by then-Gov. Edwin Edwards during his third term in the late 1980s. Before its introduction, governors, including Edwards, would simply boost the estimated price of oil in the upcoming year or accelerate the projected growth of the economy. That would give them more money to spend.
The REC has stopped those practices by effectively imposing a cap on how much lawmakers can appropriate. Now, the amount is based on how much revenue the REC determines will be available based on calculations by the chief economists for the Legislature and the governor’s office.
The REC has not been fail-safe. During Gov. Bobby Jindal’s second term, then-House Speaker Chuck Kleckley, R-Lake Charles, then-Senate President John Alario, R-Westwego, and Jindal’s commissioner of administration, repeatedly over-estimated how much money the government would collect. The optimistic projections helped offset Jindal’s refusal to raise taxes to pay for all the services demanded by the public.
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By mid-year, when it became clear that spending was exceeding revenue, Jindal had to impose unpopular budget cuts.
Near the end of Jindal’s tenure, a group of legislators known as the “fiscal hawks” pushed through restrictions on how governors could use one-time money – dollars that were available for only one year – to pay for annual expenses and paper over a looming budget deficit. Jindal’s profligate use of one-time money contributed to the $2 billion budget deficit that he bequeathed to John Bel Edwards.
In the 1990s, the Legislature and state voters also imposed a constitutional cap on how much the Legislature could appropriate each year based on the growth in state personal income.
State Rep. Beau Beaullieu, R-New Iberia, won the Appropriations Committee’s approval Tuesday of three measures that would lower the expenditure limit. It was the first step in winning overall legislative approval.
An analysis by Greg Albrecht, the Legislature’s chief economist, shows that the Legislature actually appropriated $537 million less than the expenditure limit last year when it approved a budget that contained $13.3 billion in state government revenue.
One of Beaullieu’s bills, House Concurrent Resolution 8, would lower the expenditure limit for the fiscal year that begins in mid-2021 by $1.05 billion, or 7%.
Another measure by Beaullieu, House Bill 464, would ask voters in November whether they want to recalculate how the expenditure limit in the Constitution is determined, in ways that would likely constrain spending.
“I’d like to make sure we are constantly reminding ourselves to live within our means,” said Beaullieu, who also believes that taxes are too high.
Under the recalculated formula, the new expenditure limit would be based on population growth, the regional rise in the consumer price index, the national GDP and the increase in state personal income.
Jim Richardson, an LSU economist who served on the REC until last year, said Louisiana’s flat population alone would restrict the growth in the expenditure limit.
The Legislature could bust it with a difficult-to-get two-thirds vote.
The Pelican Institute for Public Policy, a New Orleans-based group that favors lower taxes and less spending, helped Beaullieu develop his proposals. “We’ve been writing about these kinds of budgetary structural reforms for a while,” said Daniel Erspamer, the group’s CEO.
Edmonds proposed his 98% spending limit last year. It passed the House but died after Alario diverted the bill to an unfriendly Senate committee. Alario has now been term-limited out of the Senate, and his successor, state Sen. Page Cortez, R-Lafayette, is more conservative.
If adopted this year, Edmonds’ House Bill 118 would force the state to spend at least $206 million less in 2022 than it planned to spend in 2021.
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“This is not just a response to COVID,” Edmonds said. “This is a philosophical approach with how we start a budget.”
He noted that the Legislature can vote to spend all of the money available, not just 98% of it, with at least 53 votes in the 105-member House and 20 in the 39-member Senate.
“Your hands are not tied,” said state Rep. Tony Bacala, R-Prairieville, a supporter of HB118.
Dardenne noted that without this type of control, Edwards and the Legislature not only eliminated the Jindal-era deficits – principally by increasing the state sales tax and also by cutting government spending – but also produced budget surpluses during the past two years. The latest surplus will lessen the size of the upcoming cuts caused by the pandemic.
Dardenne and Moller also said that legislators could simply choose to spend less than all of the available money without a law that requires them to do so. But doing that would mean voting to cut programs popular with their constituents. Moller sees the Edmonds legislation as a cop-out that will allow lawmakers to say that the law ties their hands.
“If the Legislature wants to limit spending below the forecast, they should explain what they want to cut and come up with 53 votes to do that,” Moller said, referring to the number of votes needed to pass the budget in the House.