Louisiana state budget shortfall issue divides legislators
Published: Thursday, February 24, 2011, 10:10 PM Updated: Thursday, February 24, 2011, 10:22 PMSimple math dictates that legislators will have few options when they convene this spring with the task of closing a $1.6 billion state budget shortfall for fiscal 2012.
View full size"You've got four choices," House Speaker Jim Tucker, R-Algiers, said Thursday, "raise taxes, cut spending, use one-time money, or eliminate tax exemptions."
That much is apparent to all parties, but consensus among Capitol players ends there according to the speaker's analysis of the political landscape leading up to the April 25 opening gavel.
Gov. Bobby Jindal promises he won't sign a tax increase, which he defines to include the repeal -- temporary or permanent -- of any tax exemption or deduction. But the governor also suggests that he wants to soften the blow to state agencies, particularly colleges and universities. Jindal has proposed to sell state property, including prisons, and to tap a number of dedicated accounts that currently do not feed cash to the general fund budget. Jindal, who campaigned in 2007 as a critic of spending one-time money on recurring expenses, has made increasing use of the practice as revenues have plummeted with tax cuts, a slumping economy and the end of post-hurricane recovery money.
In the state Senate, a faction has in recent years advocated boosting revenues, either in the form of an increased tobacco tax or by delaying or repealing income tax breaks and deductions that lawmakers restored in 2008 with the full repeal of the Stelly Plan of 2002. The upper chamber, however, has joined the governor in embracing one-time spending to plug budget holes.
The House, meanwhile, has staked its spot on the far flank of austerity, opposing all tax increases and pushing spending cuts that Tucker said would have spread pain over a period of years rather than lead to the major shortfall projected this year.
"Each of the past two years, we have taken the governor's budget and sent it on to the Senate with a smaller bottom line than when it arrived," he said. But each time Jindal sided with the Senate's heftier spending total. The House may have lost those battles in 2009 and 2010, but Tucker noted a key difference this year: No federal stimulus money that Jindal and the Legislature accepted to balance the past two budgets. "This is the reckoning," Tucker said.
The speaker said Jindal will set the session tone when he decides how much one-time money -- and the sources -- to include in the executive budget proposal that is due in March. The Legislature has sole constitutional authority to appropriate, but historically has not deviated significantly from the governor's budgeting parameters.
"The governor is out there telling universities that they don't have to expect" cuts as deeply as previously forecast, Tucker said. But the speaker questioned whether there is enough one-time revenue available to make such a guarantee. The session could go off the tracks early, Tucker said, "if we get a budget from the executive branch with money that he knows isn't there."
The speaker did not add an explicit "I-told-you-so" about Louisiana fiscal fortunes, but he said, "This ($1.6 billion) is not a number that we didn't know was coming."
Tucker attributed the shortfall to "one vote in this state's history," but he wasn't fingering the Stelly repeal that costs the treasury in the range of $400 million annually. He pointed instead to post-Hurricane Katrina votes to raise the state spending cap. "Conservatives said at the time, 'Don't do it,'" he said, arguing that it defied common sense to assume that the post-flood tax boom would last.
That decision, Tucker said, delayed meaningful action on five "structural problems": the number of state employees, state pension liabilities, the charity hospital system, a higher education system the speaker calls duplicative and a criminal justice system that he said imprisons too many Louisianians.
Tucker also deviated from Jindal on the nuances of tax policy, saying that he views exemptions -- which total in the billions annually -- as a separate policy debate from tax rates. That's something the Legislature eventually will have to examine, he said: "I believe in smaller government. I've said all along that we have a spending problem and not a revenue problem. But let's just say that I don't feel quite as strongly as the governor about some things."
Bill Barrow can be reached at email@example.com or 504.826.3452.