One of the great ideas to come out of the crash in the state’s economy, and thus the crash in its budget, was the notion of the Revenue Estimating Conference.
Before the REC was established, and before other reforms were made in the late 1980s, the worst had happened. With a huge proportion of state revenues coming from spiking oil and gas revenues, Louisiana voters got used to easily funded services and benefits.
And state leaders grew accustomed to using oil price estimates as a convenient way to dodge tough budget problems.
Money got a little tight, and governors or the Senate president typically had to deal with conflicting demands on the available cash. Why not just “estimate” the price of oil higher? More money was anticipated, and a politically plausible budget was passed. Until the crash of the mid-decade, it more or less worked.
The oil crash was a harsh teacher. Legislators and reformers pushed a better system, creating the REC to generate more objective revenue estimates to constrain reckless spending at the State Capitol.
One of the key REC figures was Jim Richardson.
The LSU professor and teacher in the highly regarded public administration program was one of the Big Four among the REC members, the others being the Senate president, House speaker and state commissioner of administration.
It was fortunate for Louisiana that Richardson’s experience and credibility drove the discussion based on the numbers, not the political wishes of the spending trinity next to him. Over 30 years, he has served the state well. His retirement from the REC post is a milestone, and we hope it draws attention not only on his contributions, but the principles that underlie the REC and other processes of financially responsible government.
In the past few years, partisan arguments have taken over at the State Capitol, traditionally not the place where R and D labels meant much of anything in day-to-day deliberations. Some of the more conservative members in the Republican-led House have said that the REC numbers are bogus, even though they are informed by predictions of several state economists and the fourth member, Richardson, without a political ax to grind.
We see the REC as a fundamental improvement on the past and a far better solution to budget forecasting than partisan battles or complex fixed formulas that have been kicked around as alternatives. Those have not worked well in other states.
Ultimately, it is the reasoned judgment of legislators and governors that determine whether the state is spending money responsibly. But that process has been helped along by an independent vote on the REC from Jim Richardson.
His successor will have big shoes to fill.