The $1.25 billion question

When Governor Jindal was campaigning last fall, he was openly critical of former Governor Blanco’s use of non-recurring revenue to perpetuate $800 million of spending in the current (FY 07/08) budget.

Candidate Jindal made a valid point: Using one-time money to fund recurring expenditures is a dangerous game of kicking the can down the road, hoping that somehow future revenues will grow sufficiently to offset the reliance on the one-time money.

When Governor Jindal submitted his executive budget this March, he covered half of the $800 million hole with recurring revenues. He promised he would fill the balance in the next (FY 09/10) budget. However, when the Revenue Estimating Conference met recently and certified almost $400 million in higher revenue for next fiscal year, the governor and the Legislature moved to use that money to plug the rest of the hole created by Blanco’s use of non-recurring revenue. That should leave the next (FY 08/09) budget essentially independent of one-time revenue to balance the books.There may be, however, a move afoot to duplicate the problem the Blanco administration created by budgeting one-time revenue for recurring expenditures.

HB 926 is an instrument co-authored by the chairmen of the House Appropriations (Rep. Jim Fannin) and Senate Finance (Sen. Mike Michot) Committees. The bill would take $930 million of the $1.25 billion in excess revenues on hand in the current budget year and shove them into a group of “special funds.” If the dollars go into these funds, they will not end up as surplus. If they were to roll over as surplus, the state constitution requires that they be spent on truly non-recurring expenditures such as highway construction, coastal erosion, and the paying down of state debt. There would be no danger that the $930 million in non-recurring revenue could be spent on items recurring in nature.

HB 926 should lead legislators and the media to ask some important questions of the Jindal administration and his leaders in the Legislature. If the $930 million is diverted into the “special funds,” it could not be spent either in the current budget or the FY 08/09 budget without a huge increase in the spending cap. That isn’t likely to happen-especially in the House of Representatives. If that is the case, why shove almost a billion dollars into these “special funds”?

One hint might come from the fact that the FY 09/10 budget will likely see a $1.2 billion increase in the spending cap through personal income growth that the cap is tied to. Could the possible move to push the $930 million-or more-into the funds be designed to drastically increase spending in the budget to be enacted in the 2009 Regular Session? If so, it would be with money that has not been certified to be recurring for future purposes. If that is the plan, how would it be any different than Governor Blanco’s actions that were denounced by then-candidate Jindal?

Fiscal conservatives and members of the media should keep a careful watch on what-if anything-happens with HB 926 during the remainder of this session. If the bill moves and is loaded down with hundreds of millions of dollars in excess revenue from the current budget year, some serious questions should be asked of the governor and his legislative leadership. The Blanco administration was criticized for partially funding a bloated budget with non-recurring revenue. If it was wrong for Blanco and her legislative leadership to do it, why would it be proper for Jindal and his to do the same?

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