When President Donald Trump started tweeting recently about rapidly dropping oil prices — never mind all that ugliness with Saudi Arabia — he hoped his supporters would start celebrating.
But among those responsible for Louisiana’s budget, the news means it’s time to start worrying.
At Tuesday’s Revenue Estimating Conference meeting, economists shared generally good news of higher revenue forecasts for both the current fiscal year and the next. With the fiscal cliff finally behind them, Gov. John Bel Edwards and many other politicians, Democrat and Republican, hope this will help them pay for the teacher pay raise they want to pass during the spring legislative session.
Just when it seemed fights over Louisiana's state budget had become a thing of the past, tempers flared again at the State Capitol on Tuesday …
But the forecasts used data that predated the recent drop in oil prices, which means that better tax collections could be undermined by reduced income from industry activity in the state.
That, along with some other less specific professed concerns, was enough to give House Appropriations Committee Chairman Cameron Henry an excuse to withhold his support for recognizing the money, which requires unanimous approval. Unless it’s reversed at a future meeting, the REC’s non-decision will keep the administration from spending this year’s money as the Legislature already allocated it, and will prevent lawmakers from including it in next year’s budget.
Henry’s move drew well-earned cries of politics from the Edwards administration and Senate President John Alario, who are intimately familiar with his habit of grandstanding over taxing and spending issues.
There was one genuine concern hanging over Tuesday morning’s meeting of the state Revenue Estimating Conference. It involved whether a recent …
"In an unprecedented political ploy, Chairman Henry objected to adopting the forecasts proposed by the economists," Edwards said in a harsh written statement. "Both the Legislature’s economist and the state’s economist projected an improved revenue forecast for the state as a result of an improved economy. This is not new money or asking for additional money."
And indeed, the REC routinely makes adjustments up or down based on changes in economic conditions.
Still, this is an issue that’s worth watching. It’s too soon to say whether the price plunge is a blip or a long-term trend, but if the latter is true, it could cause trouble. It has in the past, most recently when lower prices combined with the national recession and the Legislature’s short-sighted elimination of the Stelly tax increases to create the last fiscal mess.
Politics aside, consider this a reminder that more economic diversification is in order. It's never good when the state’s fortunes depend so much on a single sector.