As talk of the state’s operating budget dominates Louisiana political discourse, highlighting how a failure of will by policy-makers makes this an annual exercise in contortion, an enterprising piece reminds how the capital outlay budgeting process suffers from the same.
Jeremy Alford writes about that latter exercise, which, while just a couple of billion dollars in cash and about twice that in bonds of which only a few hundred million goes to new projects compared to the operating budget that is over four times that combined total, itself nonetheless causes dysfunction. Unlike with the operating budget, the bizarreness of which comes from a straitjacketed fiscal system that poorly matches revenues to expenditures on the basis of need largely because lawmakers have given themselves so little discretion over it, with the capital outlay process legislators have a great deal of discretion but then in effect hand it over.
In both cases, these convolutions have evolved because they suit the needs of legislators. With the operating budget, passing so many statutes and along to eventual voter approval so many constitutional amendments has set aside about four-fifths of all state-generated revenues for particular purposes. Many years this manufactures a crisis among the few areas unlinked to money, causing great agitation as some portion of funds ends up backing low priority needs while those considered most important face cutting and tremendous gymnastics to get covered whatever of them can be.
While this elicits wailing and gnashing of teeth from some self-proclaimed reformers who then implement all sorts of tactics to treat the symptoms, few if any have the guts to go after the disease, which is far too many dedications. Legislators, despite their grumbling, prefer it this way because it helps them to disclaim responsibility for spending choices. If they loosened dedications significantly, every year they would have to make choices about where to send money, upsetting some special interests in the process that might retaliate come reelection time. By removing as much as they can from decision-making, they avoid the heat and they have a ready-made excuse as to why when money goes to certain places that’s not their fault, throwing up their hands and braying that it’s out of their control so don’t blame them – when it really isn’t beyond their abilities, of course, since a change in law could solve for many of these directions.
Concerning capital outlay, legal changes would not be even necessary to improve performance. This budget’s formulation involves first a calculation of the net state tax supported debt, which can be no more than 6 percent of state revenues, where the difference between that and outstanding bond obligations is the amount of new construction allowable in the budget for that fiscal year. Then legislators pass a bill filling it up, almost always having to keep ongoing projects and jockeying among themselves to get new stuff in particular to their interests and districts.
The problem comes when, almost every year, they cram more projects in than funding authority exists. This then punts the final disposition to the State Bond Commission, where informal practice places more allies of the governor on it than any other interest can muster. Thus, the governor has disproportionate influence over what actually gets funded, and he can use this leverage as a tool to further his policy agenda in other areas.
Legislators carp about this, and Alford reports they express a desire that things were different. This reaction is a prime example, for those who behave these ways, of saying one thing but doing another, for all they would have to do to remove the power they default to the governor is to approve of a bill that has only so much spending as there is borrowing capacity. But they don’t, for the same reason they don’t reform the state’s fiscal structure: abdication of responsibility where they can accrue credit for doing something – getting a project into the capital outlay bill – and then blame somebody else – the governor – for sabotaging their heroic efforts, without ever letting on they could solve their own problems if they were willing to take the heat for putting some projects in while rejecting others. The more they can heap in, the less heat they feel when they deflect blame elsewhere.
So it’s hard to feel sympathy or get excited about this moaning and complaining, because in both instances these self-induced problems are so easy to fix: get rid of so many dedications and don’t let the governor become the deciding factor by having the discipline to fund only what’s available. However, that kind of initiative takes political courage, which always has been at a premium in the Capitol. As a result, don’t expect any changes, because legislators want things this way no matter how many sides they talk out of their mouths on this issue.