Legis session ends in budget compromise
10th June 2013 · 0 Comments
By Christopher Tidmore
In the waning hours of 2013 Louisiana legislative session, the Senate and House passed a $25.4 billion budget, defying those who believed a special session might be required to enact this year’s HB1.
It constituted a true compromise, with Democrats managing one-time boosts in salaries for teachers and support personnel, though attempts to accept increased Medicaid dollars failed. (Judges earned permanent payraises.) Republicans saw voucher funding saved, though they needed to boost teacher pay as an incentive.
However, the GOP “fiscal hawks” in the House, who defied the Governor–and nearly removed his hand picked Speaker from office over the use of one-time money in the budget–settled for a final version that increased spending and relied heavily on non-recurring revenues. They did succeed in one change that might make future budgets more balanced, however, if more susceptible to tax increases.
As budgetary expert C.B. Forgotston, an early enthusiast for the fiscal hawks, confessed that the Republican reformists effectively failed in their attempts to thwart the Governor in the use of one-time revenues.
“In February,” Forgotston noted, “when Bobby Jindal submitted the State Operating Budget for FY14 to the leges it was $24.8 billion. A few minutes ago, Rep. Jim Fannin said the budget (HB 1) as approved today is $25.4 billion. That’s a $600 million increase in spending.”
“We know that the Revenue Estimating Conference increased the available revenues by approximately $118 million for FY 14. This begs the question of where did the other $482 million come from? The Tooth Fairy?”
“During the last lege session, I saw a glimmer of hope with a minority in the House of Representatives who dubbed themselves the hawks. The Hawks were fiscal-conservatives in the House who banned together in an effort to halt the use of one-time funds for on-going expenses. They tried hard, but were overwhelmed by Bobby Jindal and those who live off of the state trough. While they lost, I saw it as the beginning of an effort to bring fiscal sanity to the state budget process…” Forgotston, though, later believed their efforts not just failed, but morphed into “politics as usual” in Baton Rouge.
The Fiscal Hawks had stopped a few of the Governor’s proposals, including raiding a $100 million surplus earned by the Morial Convention Center to plug the budget. However, their answer to stop the use of one-time money, was to as BR insider Brian Scott put it, to use a replacement “that sounds a lot like one-time money.”
The added revenues in the budget were predicated on a tax amnesty program that hopes to wave fines and actively encourage back tax payments in exchange as a way to bridge the deficit. “To me, that’s one time money,” Scott told The Louisiana Weekly, “and that’s okay. We’ve used one time money every year for more than 30 years to fund critical needs in the budget.”
However, the fiscal crisises that come every legislative session usually emerge from the unreliably consistent funding sources. When the 36 House members defied the Governor for that very reason, it constituted the first major legislative revolt in decades. In fact, behind the scenes, and generally unreported, Jindal’s hand picked House Speaker Chuck Klechley reportedly almost lost his job over it.
One of the key players in the budget debate who acted as a bridge between the Republican rebels and the Democratic caucus, who managed to ally moderate liberals like Rep. John Bel Edwards with conservatives like Rep. Cameron Henry, was Algiers Democrat Jeff Arnold. And, he almost became Speaker because of it.
If Klechley had followed the Governor’s original request to kill the “fiscal hawk” proposals before they emerged from the Appropriations Committee, inside sources reveal that the GOP hawks would have supported a challenge to the sitting Speaker. Arnold, a conservative Democrat who often voted with the GOP yet had actively been an architect of the anti-Jindal reform budget, would have enjoyed enough support to claim the Speaker’s chair.
It would have been the first time a sitting, gubernatorial supported speaker lost his job in decades. (A coup succeed in the State Senate during the Roemer Administration, but never in the House.)
Reportedly, Klechley went to Arnold to ask about the effort. Arnold, by all accounts, told the Speaker that there would be no effort, if he allowed the fiscal hawks/Democratic budget to be considered.
The Speaker did as instructed (albeit his instructions came in the most velvet words imaginable.) The reform budget, though, ran into immediate problems as soon as it got to the floor. In order to forestal raids on pools money from the BP settlement to the Convention Center budget, it originally proposed as series of tax increases. Some, such as higher cigarette levies, were relatively uncontroversial–for a tax. Others crossed into the deeply unpopular territory of a statewide property tax, a measure even Bobby Jindal avoided in his ill-fated tax reform proposal. (His phase out of the income tax in exchange for higher sales taxes died in the session’s first week).
The final budget spends a bit more money than Jindal originally sought, but it follows the Governor’s original model quite closely. An analysis by LSU-S Political Scientist Dr. Jeff Sadow reveals, “While the parameters will become clear by the end of the day, the apparent compromise product for Louisiana’s operating budget represents a small defeat for conservatives in concessions on extra spending that perhaps did not have to be made and in the potential for bigger government down the road.”
One comprise in the budget occurred over voucher funding. Essentially, following a State Supreme Court mandate, in order to pay for already allocated private school scholarships, money was removed from the Minimum Foundation Formula as constituted. In exchange, teachers and staff received a one-time “bonus”. However, the law was tweaked in a specific way, that can transform the bonus into a permanent payraise, if the Board of Elementary and Secondary Education continues to fund voucher monies in future years.
As Sadow explained, if BESE changes the MFP formula in future years to reflect the need for voucher money, “then the only BESE option is not to include a 2.75 percent increase that can fund increased salaries permanently, which should be its course action in order to fund vouchers. Perhaps this is what Jindal meant when he said he would try to make the raises permanent, if the MFP is altered as such is accepted by the Legislature in the future.”
“If so, no harm is done. Assuming BESE cooperates, Jindal and conservatives can remind the Legislature that any permanent pay raise depends upon diversion of funds to vouchers. Only in the unlikely circumstance that BESE goes against reform would this come back to haunt them.”
“Again, whether that pay raise and other temporary public school bucks need have been given to get a budget remains in question, and that it gave Democrat fortunes a boost in indisputable.”
Nevertheless, the fact that Democrats felt overall discontentment with the final budget outline was demonstrated by the press release their leader in the House sent out at the session’s end. It barely mentions the budget fight that swallowed most of the oxygen of the session, and concentrated on the defeat of Jindal’s tax reform.
“Democrats went into the session determined to put Louisiana first. We are able to say that we did just that by looking out for Louisiana’s families, businesses and workers,” said House Democratic Caucus Chairman Rep. John Bel Edwards, D-Amite. “We worked closely and cooperatively with Republicans, independents and Senators. We were able to unite so that Governor Jindal had to withdraw his efforts to give Louisiana the highest sales tax in the nation and the most regressive tax structure in the nation.”
“The governor then asked us to get rid of the income tax without any plan to replace the revenue. We did the responsible thing and said no,” Edwards said. “All these efforts were led by Democrats but they were bi-partisan efforts, which are great. While we have accomplished some wonderful things, we still have a long way to go,” Edwards said.
He did note that his caucus worked to craft “a responsible and workable budget after the Jindal administration saddled the Legislature with a gimmicky budget loaded with contingencies,” but otherwise said nothing about the final result—good or bad. In fact, most of the press release dealt with Jindal refusal to accept expanded Medicaid dollars under the Affordable Care Act., noting “House Democrats led the fight for Medicaid expansion but were blocked by the governor’s partisanship that put his own ambition before the needs of Louisiana’s people.”
This article originally published in the June 10, 2013 print edition of The Louisiana Weekly newspaper.