SADOW: A Golden Opportunity Arises Due To Democrats’ Budget Blunders

Perhaps on the brink of getting glorious something for absolutely nothing, if Republican legislators are smart Democrats may find they got themselves to pull defeat from the jaws of victory on the issue of Louisiana’s budget.

Yesterday, unanimously the House rejected Senate changes to the operating expense budget HB 1. These included adding back in from previous House receipt of the bill some “one-time” money, or a mix of recurring revenues that do not initially go to the general fund and nonrecurring monies from things like asset sales, spending more on higher education and on a educator salary bonus, and reducing cuts to government contracting and other ancillary services that otherwise might not be implementable.

This probably mostly pleased one of the three House factions, conservative Republicans, despite their misgivings over the increased size of government that resulted. That change they likely countenanced to satisfy Democrats, the chamber’s minority but made relevant in the debate because other Republicans, termed “fiscal hawks,” had broken with the leadership and initially proposed a combination of tax increases and cuts, reductions in the least valuable tax credits, and a semi-gimmick tax amnesty in order to wipe out any use of one-time money. Although each group represents about a third of the chamber, the “hawks” had leverage because of the House rule that forces the use of any one-time money past a certain growth factor, which produced a figure of $188 million this year, to be approved by a two-thirds vote.

It had been the combination of the “hawks” and Democrats that had gotten the initial version sent over to the Senate, marginalizing the conservative Republicans. The former went for it largely because of its one-time money limits and because it also coupled the effort to a series of bills that modified the budget-making process in state government that they claimed had more fiscal rectitude, and the latter cooperated because they got a bit of a tax increase and reductions in some tax credits they can use to claim they are against “wasteful” spending, but mostly because otherwise they had no power to influence anything and by bucking conservative Republicans they also had a chance to politically poke in the eye their opposition’s partisan ally Gov. Bobby Jindal.

So when the Senate threw it back, it contained the seeds to divide the unholy alliance. For the “hawks,” it only put in back half of the one-time money and for Democrats it increased spending with the bonus, on higher education, and in granting a small increase in the number of the disabled to be served in the community. But it also decoupled the “hawk” change measures, all but one of which would make marginal improvement with the other making matters obnoxiously worse. In effect, the deal was sweeter for Democrats than “hawks” because of the growth in government it allowed.

At this point, Democrats should have gone pleading to conservative Republicans to take the version, pledging their support. This powerless faction made otherwise by the internecine split of their opponents had gone from getting a little to getting more without compromising on anything, wielding influence far beyond their actual strength. Together, they had enough votes to meet the two-thirds requirement on the one-time money and much more than the simple majority of the seated chamber to pass the whole thing.

Yet apparently they didn’t, because they began to make noises about how they wanted even more, principally a 2.75 percent increase in the Minimum Foundation Program funding mechanism. Essentially, this would lock in that increase forever, which could get used for a teacher pay raise permanently instead of a bonus, but is entirely unwise because students increasingly will look to use the state’s scholarship voucher program that cannot be funded out of the MFP but can use dollars forgone to the MFP as a result of not implementing the typical increase of this amount. That increase has not been granted the last few years, but prudence dictates that for now and some years in the future is not needed to be pumped into a declining system but would be useful to the one on the increase.

Having in an unforced erroneous way acquiesced to unwise policy triggered by the split, Republicans should take advantage of the now unforced error of Democrats to overreach. That the House rejection was unanimous to send matters to a conference committee, and with the House delegation being made of up two representatives of each faction, shows all three sides think they can win and won’t be cut out of any deal.

But only two can tango in this instance, with any deal needing a majority of delegation to continue the process, which if on the House side happens if the Republicans unite. And one of those partners must be the conservative Republicans, because they are backed by a Senate majority and by Jindal. And surely they have more in common with the “hawks,” who despite their earlier enthusiasm for tax increases and with their preference for using sanitized one-time money in the guise of the tax amnesty while all other forms suffer from pox, on the issue of smaller government, than they do with the expansionist appetite of Democrats.

So, the smart thing for the GOP to do, and the best policy for the citizenry, would be to get the Senate to ratchet down the one-time money from its current $272 million level to $188 million, and dump at least the bonus, if not some of the additional higher education funding. At the same time, they could couple back in the “hawk”-inspired modifications, save the obnoxious one that would make declaration of all funds received into government either “recurring” or “nonrecurring” which would serve to politicize the use of available funds that would increase pressure for growing government and tax rates, to get them into statute (not the Constitution, as the “hawks” initially wanted).

Unless the “hawks” wish to completely neuter their own influence as a sacrifice on the altar of bigger government, this is a great compromise for them to join with the conservative Republicans. As a result, they can point to getting some tepid reforms in place (which do not address the real cause of fiscal dysfunction in state government that being too many dedications to offset too little courage in making discretionary budget decisions) and to getting one-time money use down to what the rule they inspired say is acceptable. Then they could continue to agitate for more without seeming like they sold out their ever-changing principles.

This gives Democrats next-to-nothing, their rightful reward for losing the battle of ideas in elections. However, good policy-making often goes out the window when personalities and egos get involved, and a new majority party like the GOP learning how to govern is especially prone to making that mistake. In the next two days until session end, we’ll see how grown-up it is in order to give the citizenry a good budget deal.

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