It’s good news that, come January, the state will be showing a surplus of around $160 million.
Let’s not pop the champagne corks over the cash.
Naturally, Gov. Bobby Jindal was quick to claim credit for the surplus, from the fiscal year ending June 30. “We made difficult decisions that are paying off and now our economy is growing,” he said.
Governors get blamed for the bad news that happens on their watch, deserved or not, so Jindal is entitled to take a bow for some good news. The reality under the hood is never as pretty as the shine on the exterior, and Louisiana’s finances are still a jalopy, not a sports car.
The surplus may have been driven in part by good oil prices and the Haynesville Shale drilling in northwest Louisiana. Wasn’t the shale play a while back, one might ask.
Yes, but one of the huge tax breaks that Louisiana gives the oil industry is a 100 percent credit on severance taxes until a horizontal well is paid off. So now, for the first time, we’re seeing wells get on the tax rolls.
That the state gives away such a lavish break — intended only to encourage “experimental” horizontal drilling in the 1990s — is a sign that the tax system leaves much to be desired.
Another issue is that some large taxpayers may have advanced payouts before the latest round of federal tax increases took effect. Of course, that might mean less state revenue going forward in future years, but it’s hard to predict.
All that said, there’s also a pretty good case that job growth and new industrial projects in the state suggest a brighter revenue picture, as Jindal said.
This surplus doesn’t fix the great structural problems with state finances, including the oil tax breaks and those of other powerful industries. Or the huge cuts in income taxes and others that Jindal pushed in 2008, when revenues were flush, with disastrous long-term consequences.
Or the glaring deficiencies in highways, bridges and state buildings that take big money to fix. Or the long-term debts in retirement systems. Or — well, there are more things on the list of any knowledgeable observer of state finances, happy talk from the Jindal administration aside.
If the surplus doesn’t solve the big problems it can nevertheless be used in a fiscally conservative manner: refilling the state’s depleted “rainy day” fund. Officially the Budget Stabilization Fund, it holds another IOU from the governor and Legislature. About $330 million must be repaid by fiscal year 2016, so this fiscal 2013 surplus would go a long way toward that goal.
We encourage the governor and lawmakers, despite the pressing nature of other needs for such one-time money, to get a head start on the rainy-day IOU.
And even if our sputtering tax system still manages to generate some revenues, let’s hope that governor and lawmakers do not lose sight of the need to fix the engine one day. It’s overdue for a tune-up.