SADOW: Louisiana House Guts Edwards On Capital Outlay

In case you missed it, the Republican leadership in the Louisiana House of Representatives just signaled again that a new sheriff had come to town.

The House Appropriations Committee examined HB 2, the capital outlay bill, dealt with $2.3 billion in cash the state had set aside for projects, as well as authorizing $3 billion in sales of general obligation bonds. But the real significance of its actions came over the use of $348 million in past surplus money eligible for spending on these kinds of projects.

This money came available from the fiscal year 2019 budget surplus, after shunting constitutionally-mandated portions to the Budget Stabilization Fund and to paying down unfunded accrued liabilities in state pensions plans. Besides these items and capital outlay, such funds also can go towards paying down state debt.

The Gov. John Bel Edwards Administration wanted the money to go to an array of projects. Instead, the committee cut that request by about half, a move instigated by bill author GOP state Rep. Stuart Bishop and backed by Republican House Speaker Clay Schexnayder. Both affirmed they thought that putting this money in the BSF and cutting down on debt best served state needs when it stares at a deficit of over $1 billion for next fiscal year and with no guarantee that state revenues will return any time soon to levels seen prior to the onset of the Wuhan coronavirus pandemic.

Naturally, Edwards functionaries cried foul. Commissioner of Administration Jay Dardenne said low interest rates should spur more borrowing rather than paying off debt, perhaps oblivious to the fact that with the recent significant fall in long-term rates it makes sense to pay off relatively higher cost debt and free up operating cash that can go to funding current operations. Transportation and Development Secretary Shawn Wilson complained that reducing money to roads could leave available excess federal matching funds on the table – even though on multiple occasions the state has witnessed this song and dance from him and his doomsaying hasn’t transpired.

But their genuine if unstated objection stems from how spending less on line items reduces their boss’ leverage over legislators. Governors historically have used a tactic of threatening vetoes of line items in the outlay bill benefiting districts of specific legislators as a tool to entice their votes on other matters. The fewer of these out there, the less likely a governor can get his way.

In Edwards’ first term, a move like this he could counter by having a friendly Senate redirect money back into projects. However, that doesn’t appear likely this time out, and chills must have gone through the governor’s spine when he heard Bishop, who as chairman of the chamber’s Ways and Means Committee holds the position that traditionally has most sway over the composition of capital outlay bills, tell administration mandarins “I’m sorry, I’m going to be hard for the next four years.”

It’s a small but significant step Republicans take in their quest to have a conservative Legislature dictate policy to a liberal governor, rather than the opposite.

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