Governor has extra $2 billion in surplus

In a few weeks, Governor Bobby Jindal will submit his first executive budget to the Legislature.

He hasn’t had a lot of time to prepare it, but it will be his first opportunity to put his stamp on state government—and the lives of Louisiana’s citizenry. The governor is in better shape financially than many of his predecessors when it comes to having fiscal resources to fashion that first budget.

Some found the cupboard very bare when they took over. Governor Jindal finds an extra $2 billion in surplus and excess revenues. Tempering that somewhat is slightly more than $1 billion the last governor and Legislature placed into the current budget with non-recurring revenue.

No one knows at this point exactly what course our new governor will take in crafting the next budget, but some elements clearly stand out as prudent things to do.
First, every dollar of those non-recurring funds in the current budget should be heavily scrutinized. Items that are not critical to operating state government should be discarded. Of course, some important items were placed into the supplemental appropriations last year to allow room for more political items to be placed in the regular appropriations bill. That brings up the second major item that should be addressed: scouring the current $30 billion budget for elements that can be removed or replaced by more critically needed expenditures.

One of the first fiscal actions that will be taken by the governor and Legislature will be to appropriate the surplus from the ’06/’07 fiscal year that ended June 30. Slightly more than $1 billion will be available to appropriate for purposes specifically identified by our state constitution. Certainly, highway construction and maintenance will again be one of the uses – – and a good one – – for these surplus dollars. Unfortunately, when a similar amount of surplus was available last year, none of it was used to pay down the huge unfunded liability of our state retirement systems.

That mistake should not be repeated this year.

The remaining pool of officially recognized excess revenue dollars is divided into extra money in both the current (’07/’08) budget, and the one the governor and Legislature will fashion for next fiscal year (’08/’09). These dollars will fuel a feud between those in government who want to reduce taxes and those who want to add more recurring expenditures to a rapidly growing state budget. As those fiscal disagreements break out, the ability of the state’s economy to provide revenues should not be forgotten, nor should the impact of inflation on maintaining existing state programs as well as any new ones. Tax cuts that can strengthen and expand the state’s economy should be at the top of the list. Eliminating and consolidating existing programs and expenditures before adding any new ones should also be a priority.

A $32 billion state budget is both a blessing and a burden. Many excellent investments and vitally needed services can be accomplished with that huge sum of money. If, as has often been the case in the past, the budget becomes primarily a political document, then it remains an unwieldy leviathan that will once again consume private sector economic feed corn and fail to wisely promote public interest.

While our new governor doesn’t have a lot of time to fashion his first executive budget, it will be an instrument that begins to fill in the blanks about his governmental philosophy and his priorities for Louisiana. In an administration that celebrates ethical government, the Jindal administration should remember the fiscal shenanigans and political pranks of past budgets and end them now.


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