While less offensive in its spending than previous efforts, the fiscal year 2023 budget proposed by Democrat Gov. John Bel Edwards is one where he still talks out of both sides of his mouth.
Much more money than expected even a year ago as a consequence of uncertainties over the Wuhan coronavirus will come rolling in, adding to extra cash from last and, projected so far, this budgetary year. By the Constitution and statute, as well as federal law attached to grants, much has to go towards specific non-recurring uses.
The $1.384 billion extra coming from the federal government sensibly will have $550 million going towards replenishing the state’s unemployment trust fund with the federal government so as to avoid interest charges, and the remainder will go to major transportation and local water and sewerage systems (although $25 million to upgrade rail service between Baton Rouge and New Orleans for faster passenger travel does nothing if the state doesn’t subsidize future such travel, which it shouldn’t). Of the just under $700 million in surplus FY21 money, it also has largely wise spending plans attached to it; after taking out the required $175 million towards the Budgetary Stabilization Fund and $70 million towards defeasance of the unfunded accrued liability due for payoff in 2029, highways, coastal restoration, and deferred maintenance get the rest.
This, Edwards says truthfully, represents sound fiscal management by using bonus cash for one-time purposes. But then he launches into doublespeak when he repeats the same concerning the ongoing FY22 budget and its use of a projected $847.5 million general fund surplus over its past forecast, plus higher revenues of $282.8 million forecasted for FY23.
While a good chunk of that does recognize a need to offset past windfalls, such as the emergency increase in the federal government’s match for Medicaid provision that will disappear, it also slathers on some $277.4 million in new commitments. Major items include pay raises for elementary and secondary education of $148.4 million, $42 million more for daycare and preschool rates, $31.7 million in raises for higher education, and $40.7 million for increased rates for Medicaid waiver services.
To degrees varying for their inclusion from little justification to very much – appropriate to the latter, the waiver service increases could help compensate for the tremendous shortage in workers for clients – all of these serve legitimate, even desirable, policy ends. But the problem is state can’t afford them over the long haul according to its own data. The latest Revenue Estimating Conference revenue forecasts after this upcoming fiscal year show a steady decline in total state-generated general fund revenues less predicted dedicated funding, from this year’s anticipated surplus to a FY24 deficit of $512 million, a FY25 shortage of $135.1 million, and a FY26 shortfall of $650.2 million.
These come as a consequence not only of legal imperatives, principally from a gradual diversion of vehicle sales taxes out of the general fund towards infrastructure and expiry of the 0.45 percent sales tax hike Edwards initiated years ago, but also because the current excesses derive from a false economy that will subside spurred by large increases in deficit spending by the federal government controlled by Edwards’ party. Worse, the expenditure baseline on which the above deficit figures are derived doesn’t factor in the contemplated Edwards increases, which if implemented would drive those red numbers even higher.
Given this alarming future picture, the Legislature should pursue little if any of these requested increases. Better that a quarter billion or more of the FY23 anticipated surplus go to various causes such a discretionary BSF deposit, early UAL defeasance payment, or accelerate part of the final payment to the federal government for a coastal protection debt that frees up the sum for next year’s use. Calling spending on what would become ongoing commitments an “investment” that doesn’t use one-time money not only is disingenuous, but in this fiscal environment also is reckless.