OK, Maybe The Budget Isn’t All That Big A Mess…

UPDATE #8: All’s well that ends well. Not that this has ended by any means, but at least the House has passed the budget by a 63-28 vote.

It doesn’t have one-time money in it now.

The way this works – or has worked for the last several years – is that everything the House has fought over will be tossed out the window in the Senate, and all the one-time money funding all the questionable spending the House took aim at will be put right back in. And the Senate will return the budget to the House at the last minute, with the governor making noises out loud and even louder noises behind the scenes that he wants the Senate version to become law, and the House will throw up its hands and give the Senate what it wants rather than say no and force a special session.

There is reason to think the House will have more backbone this time around. But the real question is whether Jindal recognizes that the House did him a major favor today forcing an actual balanced budget, and that he’s better off actually jumping onto one of those and working from a balanced-budget baseline next year, when the revenues to the government will be more or less what they are now. If he recognizes that, he’ll side with the House rather than the Senate, or at least push the Senate to adopt some of what the House did today. If not, we’ll see a similar story play out to the one which has played out the past several years – and next year’s budget will come in some half-billion dollars or more in the red, with this same pain at center stage.

UPDATE #7: Some positive reviews for the fiscal hawks…

“I want to commend the House of Representatives for coming together to rule out the use of one-time funds to balance the budget.

“I’m particularly pleased that the amendment would save taxpayer money by reducing the number of state consulting contracts and the number of state government positions by not filling vacancies.”

That was state treasurer John Kennedy.

And another…

“This is a major step forward for fiscal responsibility. I urge the governor and the state senate to follow this really positive lead.”

That was Sen. David Vitter.

UPDATE #6: After three and a half hours of debate on the amendment, including some speechifying we’ll be putting up here at the Hayride over the weekend (because it was extremely interesting stuff), it passed on a 51-48 vote.

That means the House budget won’t contain any one-time dollars in it, and instead it will something of a “loose” budget which allows the administration the discretion – with a direction to make $267 million in budget cuts from what is in HB 1 – to allocate funds within a window.

During debate on that amendment, Appropriations Committee chairman Jim Fannin chided those in favor of it by saying that discretion was an abdication of the House’s authority. Except that during the debate it came out that Fannin had already done exactly what the backers of the amendment wanted within the bill, although on a smaller scale (Fannin set up a $43 million discretionary window for the administration to work within). Fannin also didn’t address, in a speech which essentially threatened the other members that by abandoning the power to specify a budget they’d lose re-election, why it is that presenting a budget to the House floor which was not in balance and used one-time funds to cover a deficit, a practice of highly dubious constitutionality, he himself wasn’t inviting punishment from the voters.

Subsequent speakers blasted Fannin’s comments accordingly.

After the amendment’s passage, the House went to the Committee of the Whole to debate the budget. Fannin took the position that he couldn’t present the bill with so much discretion for the executive branch built into it.

UPDATE #5: No real activity on the budget yet today, or at least nothing official. The House was supposed to convene at 9 AM, but quickly adjourned until 11 AM and is only now reconvening, just before noon.

An amendment by Reps. Cameron Henry (R-Metairie) and Brett Geymann (R-Lake Charles) is being introduced which would direct Commissioner of Administration Paul Rainwater to select from a list of some $357 million in possible cuts to offset the proposed use of one-time money to fill the budget hole.

Henry’s testimony on the amendment describes part of it as offering two furlough days for state employees as part of the Commissioner of Administration’s set of options. There are also a number of other administrative cuts – including a five percent payroll cut FROM THE TOP, meaning the multitude of six-figure positions in state government people are beginning to complain about might see pay cuts.

There are also included the payment of judgements against the state, a somewhat ugly item in that should Rainwater opt for that line Louisiana would be putting off paying its obligations for a year. Of course, if the state is broke it’s not going to be paying judgements anyway.

We’ll update again when some results come out of this current debate.

UPDATE #4: On the House floor just now, Appropriations Chairman and Jindal’s budget leader in the House Jim Fannin just signaled that he’ll be bringing the budget bills to the floor tomorrow morning at 9 AM. A motion was then made, and passed, to adjourn until that time.

So tonight the Jindal administration will be hard at work trying to peel off a handful of the fiscal hawks in search of a way to put the budget problem behind them, as the hawks attempt to stand strong.

And you thought the state budget was boring. Ha!

UPDATE #3: The Times-Picayune has a fresh piece on the budget stalemate, and it explains this furlough days business better than we were able to earlier.

The proposal is a lot simpler than we understood it. Essentially, what they’re saying is they can get $96 million in savings by furloughing state employees one day a month, or 12 days a year. They also draw from some ideas state treasure John Kennedy has been waving around for years…

…$44 million in savings from not filling vacant positions, $41 million from annualizing previous cuts and other cuts to a variety of departments. A second proposal drops the furloughs, replacing them with 10 percent reductions to the legislative budget, state contracts and contributions to statutory dedications.

Alternatively, the fiscal hawks have offered to give Jindal the freedom to make whatever cuts he sees fit but has to shrink the budget by $220 million.

Word also has it that the roster of hard-core fiscal hawks has been whittled down from the 50 who initially voted against the motion to move to the Committee of the Whole to 40, based on lobbying by the Jindal administration. So long as they have 36, the hawks can still kibosh any plan to use one-time money – but of course Jindal has more goodies to use in order to get something passed than the hawks do.

The interesting dynamic here, of course, is that this budget situation has played out in a similar fashion for years and the House conservatives always have the weak hand. Because if this plays out the same way it has for the past three years, whatever cuts the House insists on will likely be put back in by the Senate, and then the House will be forced to either accept the Senate’s bloated budget (probably with 30 minutes left until the session ends) or reject it and force a special session. And since pretty much the whole legislature already has vacation plans booked for the end of the session, the idea of having an immediate special session that wipes out those plans will make for more pressure than some of the leges involved can stand.

Knowing this, the fiscal hawks are making the argument to their less die-hard peers that standing strong now and wheedling as many concessions out of Jindal and his Senate pals as possible will at least make the ultimate compromise/capitulation less bitter and more fiscally responsible. For example, cutting the deficit from $220 million to $100 million would at least preserve some of the rainy day fund for the future, rather than have it be wiped out.

UPDATE #2: The fiscal hawks now have a press release out, which reads as follows:

After a lengthy question and answer session this morning in regard to HB 1 (the budget bill), much of which concerned the use of one-time money in the state budget for FY 2012 -13, Chairman Fannin offered a motion to authorize the use of one-time money prior to considering the motion to suspend the rules and enter into the “Committee of the Whole” to hear HB 1. The motion failed on a vote of 51 yea and 50 nay. A two-thirds vote was required by House rule. HB 1 was returned to the calendar and the House was recessed by the Speaker.

The failure to approve the one-time money and to hear HB 1 was due to the concern of a large number of representatives about the repeated use of one-time funds for recurring expenses in the state budget. These concerns may be summarized as follows:

1. Our opposition to the one-time funds is based upon the reqirements of the Louisiana Constitution.

2. Using one-time money is not sound fiscal policy. It simply delays the financial problem and by delaying a resolution, makes the solution more difficult.

3. The state must adjust its expenditures on the basis of the amount of recurring funds available. This will require decisions on spending priorities, as well as additional efforts to maximize efficiencies in state operations.

The decision to vote against Chairman Fannin’s motion was not taken lightly. For over a week, members of our group have attempted to work with the administration on an acceptable solution. Unfortunately, our good faith efforts have not been successful.

Some of the House members we’ve talked to have mentioned that they have a list of line items which would balance the budget without touching education or health care – including $96 million that could be saved by eliminating something called “furlough days” at the Department of Motor Vehicles. The group got together with each member poring through line items in the budget in an attempt to squeeze out waste and found literally hundreds of things which could be cut, but were met, they say, with major resistance from the governor’s office.

UPDATE: And now a press conference is getting started at which the conservative delegation in the House is going to call out Gov. Jindal for his inattention to the budget.

We’ll have more details on that as it unfolds. But we’re told that the position of the fiscal hawks is that Jindal and his people have refused to entertain real cuts to the budget, instead attempting to shove the use of the rainy-day fund down their throat. Except that thanks to the Geymann Rule, you need a two-thirds vote to use one-time money.

Jindal doesn’t have 70 votes in the House to tap the rainy-day fund. He has more like 50 votes. So he’s going to have to deal, whether he wants to or not.

Meanwhile, the fiscal hawks say they’ve got $300 million in cuts to propose and this isn’t just some temper tantrum. They just can’t get Jindal, and presumably Fannin, to pay attention to what they’ve got to say.

Well, the governor’s got to pay attention now. He’s got to work with these people to trim that budget down to size.

ORIGINAL: We’re going to need some theme music for this post, so…

The long and short of what happened today on the floor of the Louisiana House of Representatives is that what was supposed to be a day-long budget session in which some one-time money from the state’s rainy-day fund would be poured in to fill a $220 million deficit and give the state’s economy time to generate enough revenue to catch up to current spending levels.

Fiscal conservatives in the House weren’t having it.

Debate over the state budget was shut down Thursday when opponents of using one-time money for recurring expenses blocked debate on the bill. The House deadlocked on a procedural measure that would have allowed debate of the budget in House Bill 1 just before noon, throwing plans for a day-long discussion of the spending plan into disarray. With critics of one-time money able to muster the support of nearly half the representatives, House Appropriations Committee Chairman Jim Fannin, D-Jonesboro, said it was unclear when debate would resume.

At issue is the use of about $267.7 million in one-time money taken from state coffers to fill holes in the $25 billion state budget. Opponents of the measure say that allowing those funds to be tapped, as they have regularly in recent years, enables the government to live beyond its means.

Fannin is now griping that the folks who don’t want to tap the rainy-day fund haven’t come up with the cuts to balance the budget.

“I find it ironic that we stand here and want to take out the one time money but when you come to my committee, you want to spend more money,” Fannin said.

But from up in Washington, the rebels got a big “attaboy!” from one of the state’s most aggressive fiscal hawks…

U.S. Sen. David Vitter today applauded the Louisiana House of Representatives vote to block the Jindal administration’s attempt to use one-time money to balance Louisiana’s budget.

“I really congratulate House conservatives for standing tall against the use of one-time money to balance the state budget,” Vitter said. “That practice is just kicking the can down the road—the sort of bad spending policy I’m constantly fighting in Washington that creates a real fiscal mess over time.”

Vitter has been actively engaged on this issue, reaching out to legislators and providing encouragement to make the tough decision to push for fiscal reform.

Where do we go from here? Impossible to tell. But the state needs to find $220 million, and that’s a budget which is structurally deficient. Legislators and the governor’s office will need to agree on actual programs to wipe out and actual people to lay off. Louisiana is going to have to shrink its government down to the size of its revenue stream.

How to do that, or even where to start, doesn’t look like something the folks in charge have much of a direction for just yet, with a legislative session more than half over.



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