My American Spectator Piece On Louisiana’s Budget, And Latest Developments

Last week I had discussions with the American Spectator about doing a story about the budget situation in Louisiana and how it affects Gov. Bobby Jindal’s national stature. And here’s the result.

But a little more than two months later, Jindal’s critics are no longer restricted to the moribund Democrats. He is, in fact, hearing his loudest complaints from the state’s conservatives. Because the state’s budget is a shambles — and the governor, whose record as a conservative policy wonk is both impressive and long-standing, is being blamed for the Bayou State’s sloppy fisc.

How big is the problem? On Thursday, the Jindal-friendly Louisiana Senate voted unanimously to replace some $300 million in budget cuts for fiscal year 2013 passed by the more fiscally-conservative House, using a combination of “sweeps” from dedicated funds and one-time revenue sources to finance the increased spending. That vote was whipped vigorously by the governor, whose budget proposal the Senate was largely restoring after it had been trimmed by the House fiscal hawks.

This after the Senate voted to tap the state’s Budget Stabilization Fund to the tune of $205 million in order to cover a mid-year 2012 deficit, which materialized when revenue projections from the previous year’s budget exercise proved overly optimistic.

State law indicates the Budget Stabilization Fund, or “rainy-day fund” as it’s commonly called, can only be tapped once every three years. And that means Louisiana’s fiscal future is dire indeed. Local blogger C.B. Forgotston, who has been ringing firebells in the night for years over the poor performance of our political class in painting a sustainable budgetary picture, summed up the concerns of fiscal conservatives thusly:

“According to the experts, the outlook for the 2013 fiscal year is dismal. State government will face another mid-year budget cut in December in excess of $500 Million. In the spring there will be another shortfall and thus another mid-year cut. The only question is whether Bobby Jindal is in Baton Rouge or D.C.”

Feel free to read the whole thing.

Events over the weekend haven’t really changed anything; as we predicted last week the House ultimately knuckled under and passed the Senate’s unbalanced version of the budget yesterday. They didn’t really have a choice; there’s no reason to think the political calculus would have been any different in a special session than it is in this session – namely that the Senate doesn’t have a single bona fide fiscal conservative in it and even if there were a few out there they’d be crushed underfoot by the Senate president on the governor’s behalf.

So we can’t really blame the House for not engaging in a pointless exercise. When the fiscal conservatives in that body staged their revolt earlier in the session and took a stab at balancing the budget by actually cutting it, one would have thought there would be some movement in the Senate toward meeting the House halfway. But that didn’t happen at all. The Senate didn’t uphold a penny of the House’s cuts – in other words, according to the Senate there isn’t anything in a $25.6 billion Louisiana budget that could responsibly be cut.

Ridiculous.

It’s not like this current round of spending beyond our means has no consequences. In fact, there will be significant consequences when the Revenue Estimating Conference comes back in a few months and recognizes they’ve made an overly optimistic forecast and the state has a deficit to cover. Rep. Jeff Thompson had it exactly right in the above-linked Times-Picayune article when he said…

“There’s nobody in this building that can assure me that we’re not going to be back here studying this budget again.”

The fiscal hawks lost this battle, but ultimately they’ll win the war. Because reality is on their side.

Or maybe they won’t, and instead of where to cut the budget we’ll be talking about raising taxes. At that point all political hell will break loose in this state.



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