Revenue Estimating COnference on 051821

The four members of the Revenue Estimating Conference decides how much money is available for state spending. In this file photo are, from left to right, Stephen Barnes, professor at University of Louisiana at Lafayette, who serves as an independent economist; Senate President Page Cortez, R-Lafayette, and House Speaker Clay Schexnayder, R-Gonzales, who represent the Louisiana Legislature; and Commissioner of Administration Jay Dardenne, who represents the governor.

A big state surplus, hundreds of millions in federal coronavirus aid, more money from the state’s economic growth — dare we say it, “an embarrassment of riches” for the Louisiana Legislature to spend?

That phrase was used by a top legislative leader in the early 1980s, when a gusher of oil and gas revenues gave the state a lot of money to spend. And the gusher imploded when oil and gas prices plummeted before the decade was out.

Do we want to get embarrassed again?

Aside from dedicated expenses, there is $847 million in supplemental funds for Gov. John Bel Edwards and the Legislature to distribute during the next regular session from the current year, about $1.3 billion in unallocated federal pandemic relief aid and another $1 billion in surpluses from the last fiscal year. And with the economy recovering, state leaders figure on another $771 million in revenues to the state general fund in the new budget year forecast.

By all means, let’s put money into roads and bridges, where those projects make sense and are backed up by sound planning. That’s good politics, too, as road projects are the highest priority of legislators who have a rural police-jury vision for the state.

But we have to do better than that.

There is clearly a responsible consensus among top Republicans in the GOP-led Legislature and Gov. John Bel Edwards about guardrails on the new riches. One is that one-time money should not be spent on recurring expenses — that is, the money that the feds have granted will be exhausted in a couple of years and cannot fund things like raises for teacher or state employees, that must be paid every year.

Further, as the Public Affairs Research Council approvingly noted, Edwards and legislators are committed to pay as quickly as possible the state obligations to the feds for construction of the greater New Orleans hurricane protection system. The Louisiana delegation in Congress got a good deal for state taxpayers, wrestling the debt down to $1.1 billion in three installments, one of $400 million already paid, but there’s a deadline to pay all of it by 2023.

Paying that way will save much more down the road and is an example of wise use of the money.

But what about the potential recurring investments? We like the idea of teacher pay raises and investment — it’s an overused word, perhaps, in the Biden administration — in education.

Commissioner of Administration Jay Dardenne said the governor will be looking to put new money into early childhood education and state colleges and universities.

The governor’s draft budget goes to the Legislature at the end of this month and while most lawmakers are of a different party than Edwards, a Democrat, we hope they will have similar priorities in mind. Education is the difference between the South’s rich states and its poorer ones, and everyone knows where we fit.

But remember the earlier “embarrassment of riches.” Few could have predicted the mid-1980s collapse in the price of oil, yet we know, today, that Louisiana’s budget is propped up with a “temporary” sales tax increase of 0.45%.

That rolls off the books in mid-2025 and we hope that legislators agree with Senate President Page Cortez, R-Lafayette, that additional tax cuts or other risky initiatives should not be undertaken without regard to that potential “fiscal cliff.”

What’s going to happen in 2025? We don’t know, but the federal riches are going to decline and the governor and Legislature elected in 2023 are going to have to face the sales tax concerns.

Let’s not get embarrassed by riches, ever again.

Our Views: The courthouse crowd remains a key legislative constituency