In a nine-day special session, the Louisiana Legislature and Gov. John Bel Edwards reached a compromise over new cuts to the state budget.
Unfortunately, it’s a compromise that is leading only to new battles down the road.
The February skirmish was about mid-year cuts to the fiscal year that ends June 30. Edwards proposed, we think reasonably, for lawmakers to tap the state’s rainy day funds to lessen the impact of reductions so late in the year.
The GOP-led House pushed back strongly, provoking a debate over small sums of money, leading the Senate – also with a Republican majority, but more amenable to the governor’s wishes on budget issues – to play the role of compromiser.
“You know you’re in a good place where nobody’s totally happy, but everybody’s reasonably satisfied,” Edwards said after the wrangle was over.
We fear this is a far too optimistic.
That an often acrimonious debate was needed to resolve whether $119 million should be used from the rainy day fund, compared to the eventual $99 million agreed upon by Wednesday’s deadline, shows that the House leadership and the governor are far apart on what should have been their easiest call this year.
There remains disagreement on where the money will be found for the total $304 million budget adjustment that is immediately required; in one example, the governor doubts the Legislature’s notion that there is more than $10 million in easy savings from not filling reported vacant positions. The status of a number of the other adjustments coming out of the special session will have to be worked out over the next month or so.
But the budget calendar is unforgiving, as the Edwards administration now must propose a budget for the new fiscal year beginning July 1. A regular legislative session begins in April to battle over that big item. The shortfall is estimated at $400 million but that is only for a standstill document that treads water during the fiscal year.
Looming over that is the unsettled economic and financial situation of the state in general. We’re still growing, after a punishing hit to the oil and gas industry since 2014, but a state economist reported that lower-wage jobs are all too often replacing higher-paid positions in the oil patch.
That’s not a recipe for good state tax collections, so there is reason to doubt — even if the oil patch has bottomed out from low prices — that natural growth in revenues will ease the pain much for Edwards and legislators.
And finally, the big hammer: More than $1 billion in temporary taxes enacted over the last couple of years, to fill the holes left by the former administration, will expire in 2018.
There are widely differing views of the financial world between the governor and the House GOP’s Appropriations Committee, where the budget must begin its legislative trek. We wonder that anyone would see the just-closed special session as a good sign for preparing a budget that both sides can live with, involving vastly larger sums and, potentially, much more severe cuts to state services.