Talk around the State Capitol is about how little was done by a divisive Louisiana House in the session that ends Thursday.
Much of the fighting has been over the state budget. But the safe bet is that a budget will pass.
No, the real frustration stems from all the promises lawmakers made about repairing the shaky financial structure that routinely fails to raise enough money to fulfill the state’s promises.
As far back as February 2016, House Speaker Taylor Barras, R-New Iberia, was saying the Republican majority wants “the opportunity to talk structural fixes.”
“A failure to act is not an option,” declared a task force the Legislature created to provide a potential road map for digging out of all the tax breaks, restrictions and hocus-pocus accounting that has contributed to the state’s fiscal problems.
The task force’s recommendations largely have been rejected. Though a few ideas are still in play, those proposed structural changes are now designed to be “revenue neutral,” therefore they won’t address the coming crisis.
In fact, the revenue shortfall, called the “fiscal cliff,” that looms next year when the temporary sales taxes and other measures fall off, grew larger during the session.
Lawmakers stopped relying on short-term fixes to balance the state budget every year when vo…
The go-to estimate of how short the government will be of funds around this time next year is $1.3 billion. The fiscal cliff is about 14 percent of what state taxpayers contribute to the state’s annual spending plan. Because so much of the state’s revenues are legally locked up for specific programs, the figure represents about 40 percent of the money legislators can use to balance the budget. This is why higher education and health care, which are not protected, are cut so much when the budget needs to be balanced.
The fiscal cliff is now about $1.5 billion.
It’s the bane and boon of a system in which different economists calculate how much they think Louisiana will raise in various taxes, fees and royalties given the economic climate. The Revenue Estimating Conference, which officially declares how much money is available to spend, chose a projection in mid-May that increased the fiscal cliff by about $27 million for the fiscal year starting July 1 and about $134 million for the next year.
The fiscal cliff number likely will change again when the economists have a chance to look at the impact of the bills the Legislature passed, determine what the federal government will contribute for its portion of Medicaid, count the number of students enrolled in public schools, and consider other variables, said Greg Albrecht, the Legislative Fiscal Office economist who is doing projections for the REC.
Still, that’s the number on which budget architects legally must plot their cuts and draw up their spending plans. And whatever the final number, it'll be big.
Fluctuating fiscal cliff numbers prove his point, said House Appropriations Committee Chairman Cameron Henry, R-Metairie. “If we would have allocated 100 percent of the REC money when the bill left the House, the Senate would have had to cut it by $27.4 million.”
The House majority’s strategy was to leave in reserve about 2.5 percent of what the REC says is available to cover a shortfall and end the cycle of having to rebalance the budget midway through the fiscal year.
The other part of the House strategy is a “a standstill budget,” which allocates the same amount in this year’s appropriation to agencies for the fiscal year that begins July 1, and the same amount again for the fiscal year that begins July 1, 2018.
House Republican leaders calculate that this method should take care of about half the expected fiscal cliff, which makes the task of filling the remaining gap a lot less daunting, says House Majority Leader Lance Harris, R-Alexandria.
But none of this addresses the fiscal dysfunction that led the big New York credit rating agencies to downgrade Louisiana’s credit rating, which will end up costing taxpayers more to borrow money.
The third of the three major credit ratings agencies has downgraded Louisiana's financial ou…
The grand outcome for a Legislature newly freed of a governor’s yoke, Barras said early in the session, was that great ideas to fix the fiscal structure would percolate up and be embraced. But the House was so fractured that about the only thing on which everyone agreed was that the other side practices Washington-style politics.
Both Barras and Henry predict another special session – costing about $25,000 per day for the Senate, $35,000 for the House – will be needed to come up with ways to address the fiscal cliff.
Some blame the GOP leadership in the House. Henry says the governor also must accept some of the responsibility.
“Hopefully, the governor will come out with something more specific and actually work the bills, actually lobby the bills,” Henry said.