Quin Hillyer: Jindal jujitsu, budget bust — or both?

Back in 1989, I was junior-most of a four-person team running a statewide campaign to create a coastal wetlands trust fund. So, when I heard the Jindal administration was raiding the constitutionally protected trust, I was ready to go ape.

As it turns out, there’s little need to summon my inner gorilla. The administration is monkeying with the design of the wetlands trust, and these maneuvers have left general fund budget numbers a little squirrelly — but the wetlands trust itself isn’t really the worse for being used as a guinea pig for creative financing.

First, the background: By a 73 percent vote, Louisiana’s voters in 1989 approved the trust fund, using certain oil and gas revenue to build the trust, part of which can be drawn down each year to pay for wetlands restoration or preservation. The trust has been virtually sacrosanct ever since. Meanwhile, to the Jindal team’s credit, it has managed quite well the broader Coastal Protection and Restoration Authority, created under former Gov. Kathleen Blanco, which uses the wetlands trust and other revenue for projects ranging from wetlands recovery to hurricane protection to flood control.

On the other hand, critics say the administration has made a habit of moving monies between and among the wetlands trust, other protected or semi-protected state funds and the general fund budget, in ways sometimes described as “raids.”

In February, the Public Affairs Research Council, a neutral and respected independent watchdog, criticized the administration for including the wetlands trust within this shell game.

By ordinary analysis, the wetlands trust itself doesn’t really suffer. For fiscal year 2015, the administration would take $51 million of “nonrecurring” revenue (a surplus from last year plus one-time collections from a tax amnesty program) and park it in the trust. Then it would take that same $51 million and put it into the general fund to help pay for things like higher education and health care.

State law forbids using nonrecurring revenue for annual budgeting purposes. But, the administration contends, no law restricts excess (unexpected) monies from being “transferred” among accounts with the potential of being used eventually for annual, recurring purposes. In effect, by temporarily parking the nonrecurring revenue in the wetlands trust, the administration launders it into a different budgetary category so as to shore up holes in the general fund.

It’s quite an act of numerical prestidigitation. Thus does nonrecurring revenue get counted as recurring revenue, and thus do monies placed into a trust fund (however unexpectedly) get used for purposes not ordinarily allowed for trust fund money.

And … well, gee, how did I just find that silver dollar from behind your ear?

In the short run at least, the wetlands trust is none the worse for wear. It hasn’t shrunk one penny from its original level.

The problems, though, are twofold.

First, by propping up an otherwise unbalanced general fund with monies that presumably won’t be available in later years, these maneuvers effectively borrow from the future, perhaps perilously. Second, as PAR noted, by setting the precedent of using for nonwetlands purposes any money categorized, however briefly, as part of the wetlands trust, the administration “diminishes the integrity of the Coastal Fund” — with potentially harmful legal or political consequences down the road.

The counterargument is made by Speaker of the House Chuck Kleckley. “I don’t like these tactics either, but what’s the alternative?” The public wouldn’t take kindly to harsh cuts for health care or higher education. In this case, Kleckley said, there is ample reason to believe no general fund shortfall will materialize in future years, because state tax revenue will be greatly augmented statewide by major economic development, such as for liquefied natural gas plants.

“These are projects that we don’t just think are going to happen; we know they are going to happen and they’re already starting to happen,” said Kleckley, referring, for instance, to $65 billion of projects already coming on line in southwestern Louisiana alone.

“All that we’re trying to do is bridge the gap,” he said, until those additional revenues start materializing.

In sum, this use of one-time revenues may be dicey, but it may not be a mortal sin. And, from a practical standpoint, it might even be the smartest use of resources. Sometimes, what looks “too clever by half” might actually be wise.

I still don’t like it, for the reasons provided by PAR. Plus, it’s fundamentally deceptive. But in the great scheme of budgetary integrity, it represents just a minor erosion.

New Orleans native Quin Hillyer is a contributing editor for National Review. You can follow him on Twitter, @QuinHillyer. His email address is qhillyer@theadvocate.com.