Political Horizons for July 3, 2011
Political Horizons for July 3, 2011
Budgeting process flawed
This time last year, elected officials were predicting the raft of state was rapidly approaching a fiscal waterfall.
That doom was somewhat averted for Fiscal Year 2012, which began Friday and will continue until June 30, 2012. Now, the state’s financial guardians are looking at the next budget — for Fiscal Year 2013 — and their prognosis is starting off less gloomy than last year.
That’s not to say it’s all good, says Democratic state Rep. Jim Fannin, who as chairman of the Louisiana House Committee on Appropriations sponsors the bill that authorizes state government to spend money.
Like the farmers to whom he sells feed and fertilizer at his Jonesboro farm-supply store, Fannin is not, by nature, an optimistic man. He describes Fiscal Year 2013, which begins on July 1, 2012, more like rough rapids than Niagara Falls.
It’ll be another year of cuts. But instead of having to figure out how to pay for prisons, schools and other government services with $1.6 billion less money available, the 2013 fiscal year likely will have about $300 million less, Fannin said.
The Revenue Estimating Conference, whose numbers the law requires budget makers to use, predicts that Louisiana will generate about $360 million more in revenues next year — $8.62 billion for Fiscal Year 2013, compared with the official forecast for this fiscal year of 2012 of $8.26 billion.
Much of the hoped-for increase, according to the REC, comes from a predicted $42 million increase in oil and gas royalties, plus a healthy expected increase of $194 million in individual income taxes. Revenue levels are expected to remain flat from fees and taxes on such sources as riverboat gambling, the lottery and health-care providers, according to the REC.
Budget numbers in Louisiana are elusive, Fannin said, adding that’s one reason why the sky did not fall this year. There was money from an unexpected growth in revenues, more cash from sweeping various state funds, surprise federal bucks from Hurricane Katrina reimbursements, which filtered through what Fannin calls “creative accounting.”
It led to fewer dramatic cuts and job losses than was predicted last year at this time.
“I don’t think it’s a good process. It makes people suspicious, when every year you find money,” Fannin said. “The public understands real dollars.”
One thing Fannin said he would like to change in the current budget-making process is to start the new budget with last year’s numbers, instead of predictions by state agency heads on the cost of continuing to provide current state service levels. State law requires the executive branch to submit its numbers in November and to account for inflation, benefit increases, equipment upgrades and the like.
Fannin said state officials routinely pad the numbers, because they know the estimates will get trimmed as the final budget is readied.
“It’s wants, not needs,” Fannin said, adding that he has ordered his staff to try to research an actual starting number to better identify the budget needs.
State Sen. Lydia Jackson, D-Shreveport, a banker by trade and vice chairwoman of the Senate Finance Committee, says the problem is deeper than beginning each year’s budget-making process with numbers designed for planning purposes.
“We have a structural deficit,” Jackson said. “Our revenues are not adequate to support the continuing expenses of the state.”
Jackson said a wide range of tax exemptions have been thrown down haphazardly over the years, sucking dollars from state services with little thought — and less oversight — on how those “incentives” actually benefit anyone, other than the special interests receiving them. “We’re constantly playing a game of catch-up,” Jackson said.
But how can state fiscal leaders adequately judge the worthiness of a particular tax credit in a vacuum. “What is the plan? Where are we going? What do we want to accomplish?” Jackson asked.
Two hundred thirty-five years ago Monday, after a long, often-rancorous debate, a group of legislators endorsed a business plan that outlined their goals for the nation they wanted to found.
Jackson is not out of line in demanding that Louisiana’s present-day leaders articulate a vision.
Mark Ballard is editor of The Advocate’s Capitol news bureau. His email address is mballard@the