Last week, the Lege Fiscal Office (“LFO”) reported that it was “cautiously optimistic” that tax revenues for the current fiscal year would come in as anticipated.
Apparently, the leges took that as good news because they are telling everyone who asks not to worry; there won’t be any mid-year budget cuts for higher education or healthcare. While that may turn out to be correct, it is based more on wishful thinking than accounting.
The focus of the LFO report was on the on-going tax streams that are subject to confirmation by the Revenue Estimating Conference (“REC”).
What the leges failed to take into consideration was the hundreds of millions of dollars that they appropriated from speculative, one-time sources such as the sale of real properties and savings from government efficiencies (an oxymoron) including savings from the privatizations of the LSU public hospitals.
Reporter Mike Hasten raised the questions that haven’t been asked by the leges. He asked whether certain one-time funds will materialize fast enough to avoid cash flow problems for the state colleges and universities or materialize at all. Perhaps, the leges were erroneously relying on the REC letting them know when the revenues run short.
However, the REC doesn’t monitor the funds that come from these speculative revenue sources. As a result, the shortfall from these may not be known until next spring when the agencies can no longer pay their bills.
Instead of making contingency plans, the leges appear to be happy to sit back and watch. The net result is that the leges are abdicating to Team Jindal the determination of where to cut the budget when the funds don’t materialize.
When it comes to state finances, if it wasn’t for the leges’ wishful thinking, there would be no thinking at all.Kudos to Hasten for raising the questions that the leges won’t.