The Hayride

SADOW: A Negative Review On The Budget Reform Package

SADOW: A Negative Review On The Budget Reform Package
January 30
11:27 2013

We can stop holding our collective breath in anticipation as a result of the Pythian pronouncement by state Rep. Brett Geymann on behalf of the Louisiana Budget Reform Coalition that they have seen the future of budgeting in state government. While it’s high on drama and low on substance, it’s better than nothing – in which lies perhaps its fatal flaw.

Geymann, who went into legislative cloister to summon the final product, announced the vision as a series of bills ready for pre-filing for the legislative session. The package includes a constitutional amendment to explicate in the budget produced by the governor items funded in the general fund using both discretionary and non-discretionary dollars under times of assumed reductions in spending on health care or higher education, separating them into two bills; expanding the function of the Revenue Estimating Conference to declare all funding sources as recurring or nonrecurring instead of only when surpluses are declared and then prohibit the use of nonrecurring funds for operating expenses; and increasing time for legislator review of the budget including a provision that gives each chamber time to review the others work and that the budget be passed no later than 16 days prior to the end of the session.

While at first glance these might appear impressive, in fact with one exception they comprise very little that must change substantially or substantively. Starting with the multiple operating budget bill, the capacity presently exists to produce a budget bill with monies for every single line item apportioned out by discretionary status. It’s done already in aggregate form in the budget documents presented to the Legislature, which breaks down this money in broad categories. The only difference in presentation would be doing this separating on a line item basis.

This could be done already by assent of the governor’s office, but to leave it no discretion a law could be passed dictating that. And the same goes for turning the Louisiana Legislative Auditor into an umpire determining when the two-bill process gets triggered (which requires an amendment because of the present constitutional imperative that states there is “submitted a general appropriations bill”). But even all of this isn’t necessary. Why not just pass a bill saying the budget must be presented with each line item broken into different components? Why go through creating this mechanism to declare two bills some years?

Such dramatic dealings serve a political purpose, both to bring a crisis atmosphere than enhances the perceived role played by legislators and to give legislators a little more power relative to the governor, in that they have clearer markers on which to make decisions. Increased decision-making ability is not a bad thing, but the intentional dramatization may serve as much to provide an environment of distraction ripe for political grandstanding as it does for more clarity.

(Nor would, at this point in time, there be much utility in the procedure if the goal is to enable cuts to be made in areas other than health care where greater information produces better ability to make priorities on which to base cutting. After all, of the reported $2.4 billion in discretionary general fund money available, $1.9 billion of it already flows into health care as all general fund money going to health care is discretionary. There just not relatively that much else out there to cut.)

But because it also empowers the legislature, this means Gov. Bobby Jindal may resist and can exert veto power over the enabling legislation if it passes, requiring a two-thirds majority to override the veto. By contrast, while an amendment also requires the same majority, the governor has no input. With a vetoed bill, he has time to lobby against an override against specific targets. He doesn’t get such a chance with an amendment. Still, it makes little procedural sense to make the bill-splitting contingent on certain conditions when it can be the normal procedure.

The 16-day proposal also is there to empower legislators at the governor’s expense. According to the Constitution, a bill must be presented to the governor within three days of passage, he has 10 days to veto, and then two days to deliver – 15 days. That means that the Legislature, unless it had adjourned early, has at least one day to override line item vetoes. This is in contrast to what has become practice, where the budget gets passed in the last two days, and then the governor can cast line item vetoes over the next 20 days where only a veto session – never attempted because of the extra cost and disruption it entails – could undo these.

Separating line items into discretionary/nondiscretionary as regular practice and the 16-day limit by statute do no harm unless one considers increasing legislative power and decreasing gubernatorial power as harm. But the remaining component, declaring funds either recurring or nonrecurring and not allowing nonrecurring funds used for recurring purposes, promises considerable harm if done with politics in mind.

It depends on how “nonrecurring” is defined. Certainly calling funds that come, for example, from asset sales cannot be termed anything else. But it is mistaken, if not deceptive, to call funds drawn from dedicated funds for their use for another purpose, often called “one-time money,” “nonrecurring” in this sense (which may be interpreted as such from the language in their draft legislation).

As noted previously, there is much conceptual confusion over what is this one-time money. Typically, it comprises funds forcibly gathered by some dedication in excess of their actual need, meaning excess, idle monies build up over time. Contrary to the fiction that Geymann and others have spread on multiple occasions, they feature largely predictable revenue streams, money that is available year after year.

So, if the legislation is drawn up make the usage of one-time money practice automatically off-limits (although probably with some override procedure, such as a through two-thirds majority, similar to the House rule colloquially bearing Geymann’s name), this represents not a forward but backwards move. The ability to drain idle, excess funds provides a necessary corrective to the orgy of dedication of funds that hampers rational budgeting, as it is the only treatment at this time for that disease of failure to make priorities and lack of taking responsibility by legislators.

Understandably, the reform folks want to focus on procedure, not specific revenue-generating means (the purview of another legislative effort going on currently). However, that means at best they only can treat the symptoms, and thus the real problem with this is legislators can use this provision as a fig leaf to cover up their failure of will, their chronic hiding behind dedications to let them throw up their hands in futility while claiming them simultaneously tied in making spending choices, but also claiming because they have cordoned off scarlet money they have made budgeting better. This avoids the real underlying cause of budgeting stress, misallocation of revenues on autopilot, and instead puts up as a straw man the issue of transferring money from a fund likely to be replenished for general use.

This creates the danger that posturing replaces substance, and little if any real beneficial change occurs, which always has been the Achilles’ heel of Geymann’s gang to date. Ensure there is no stricture that one-time money cannot be used at all or without some kind of supermajority, and these measures can’t make matters worse, although on esthetic grounds they need to be solutions in statute, not though amendment. Keep it in, and not only does it tighten the straitjacket smothering Louisiana fiscal policy-making, but it creates the bad temptation to declare the disease cured even as it continues to fester and grow as a debilitating menace.

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