REC meeting on 041019

House Speaker Taylor Barras, right, prepares for the Revenue Estimating Conference meeting on Wednesday, April 10, 2019. Barras, R-New Iberia, has blocked the state's revenue forecast for several months. He is speaking to Senate President John Alario,R-Westwego, who chairs the REC. Commissioner of Administration Jay Dardenne, standing, and LSU Professor Jim Richardson are the other members of the REC.

After months of blocking state revenue forecasts, Louisiana House Speaker Taylor Barras finally agreed Wednesday to recognize additional dollars, resolving one of the most significant disputes of the Legislative session and allowing lawmakers to formally craft a budget.

Barras, R-New Iberia, joined the other three members of the Revenue Estimating Conference in voting to recognize an additional $110 million in state general fund dollars for the current fiscal year, and another $119 million for next fiscal year's budget, which begins July 1. All four members of the REC must unanimously approve the amount of money the state has available to spend.

The vote came after Barras and House Republicans spent months blocking the panel from recognizing additional revenue, citing uncertainty over how much the state would collect in taxes.

Barras, who had met with Democratic Gov. John Bel Edwards a day before the vote, said he still had reservations about the estimates, but was worried the Legislature would not have enough time to pass a budget before the session ends June 6 if he did not vote to approve the revenue figures.

Now, lawmakers will decide how exactly to spend that $119 million, in an election year during which legislators and the governor appear poised to give school teachers a pay raise.

The House Appropriations Committee, where the state budget must start in the legislative process, has been holding budget hearings based on last year’s revenue estimates, in the absence of an updated forecast.

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The $119 million is expected to be added into House Bill 105, the spending measure proposed by Appropriations Committee Chairman Cameron Henry, R-Metairie. The $119 million represents a slightly smaller funding increase than Gov. John Bel Edwards’ budget proposal, which fully funded TOPS, added money to higher education and gave more money to the Department of Children and Family Services. Barras said he hopes lawmakers will not spend all of the increased revenue.

Still, the state’s fiscal picture going into the budget process looks dramatically different from previous years, when the Legislature was routinely faced with potentially devastating cuts to state services.

“You’re talking about a $19 million difference,” Edwards said in an interview after rallying with several hundred college students on the front lawn of the State Capitol. “That is extremely manageable. We’ve been talking about fiscal cliffs and budget deficits in the hundreds and hundreds of millions of dollars.”

Edwards said he plans to protect the increased funding in higher education, as well as the popular TOPS tuition program, as the budget works its way through the Capitol. The Taylor Opportunity Program for Students program has a slightly larger gap in funding, $12.3 million, than originally anticipated, something the governor said he is working to fill. 

A raise for school teachers appears likely to survive the process. The governor and lawmakers from both parties have backed it, and Henry included it in his budget proposal even before the Revenue Estimating Conference recognized new money.

After the Revenue Estimating Conference vote, Barras said he still had reservations about the forecasts because the state doesn't yet know how much personal and corporate income tax will be collected.

"I’ve been accused of ignoring the economists’ views and I don’t want to do that unnecessarily," Barras said. "These are as close as we can get ... I've pushed for the more conservative number all along and I'm going to ask we do it again today."

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If lawmakers had created a budget without an official revenue forecast, it could have created a "constitutional problem," said Senate President John Alario, the Westwego Republican who chairs the Revenue Estimating Conference.

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"Holding the revenue estimates this long was not good for planning overall in the state budget," Alario said. "Hopefully we'll get back on track."

The Appropriations Committee has been holding budget hearings for Henry's House Bill 105 based on last year’s revenue estimates. Asked where he’d like to see the money spent, Henry mentioned TOPS but said it will be up to the House and Senate to decide.

“Obviously there’s an amendment process ... The bill always goes to conference,” Henry said. “So we’ll have more than enough time to work with members, see where their priorities are and make things fit.”

Henry also suggested the state should use the additional money on one-time expenses instead of recurring expenses, in an effort to prepare for when part of the state sales tax falls off the books in several years.

Edwards dismissed that idea, saying the economy is performing better than economists previously predicted, so “that is exactly the time when you make net new investments in critical priorities.”

Lawmakers must also decide how to use the $110 million it now has in the current fiscal year, which ends June 30 – something that will happen in a supplemental budget legislation.

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The estimate adopted by the REC actually included a larger increase in tax collections than the alternative forecast, but funneled less money into the state general fund because more was directed to areas of the budget that are protected by law, called statutory dedications. Barras said he thought it was a the more prudent option because dedicated funding doesn't create a deficit situation if estimates come in lower than anticipated.

Alario, Commissioner of Administration Jay Dardenne and LSU economist James Richardson have for months tried to vote to recognize more revenue.

Dardenne said funding teacher pay raises and putting additional money toward education is still at the top of the priority list, though he didn’t say exactly where the rest of the administration’s priorities rank with the new revenue figures.

"Obviously, the top priority is what we put in there for teacher pay raise and (K-12 education)," Dardenne said. "That was the big new money addition that was in the budget. We’re still focusing on making that happen.”

Two economists, one who works for the governor's administration and another who works for the Legislature, present revenue forecasts to the panel, which must agree unanimously to change revenue estimates.

Both economists said the state's economy has grown, but that growth is expected to be "very modest," according to the Legislative Fiscal Office. LFO economist Greg Albrecht’s projections are the ones the REC adopted Wednesday.

The administration’s economist, Manfred Dix, said, “The Louisiana economy is not completely firing off all cylinders, but it is increasing.”

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Follow Sam Karlin on Twitter, @samkarlin.