Senate, House Running Out of Time

The Louisiana Legislative Session is to close no later than 6 p.m. this Thursday. Four days are all that remain to work on the year's upcoming budget.

At this point, the House and Senate are at odds regarding use of the rainy day fund, Obama's stimulus plan and delaying a scheduled tax break (not a tax increase like some may want you to believe).

Obviously, this is not a one-year budgetary crisis, and even though I'm incredibly passionate about maintaining higher education in Louisiana - both as a testament to the importance of education and as an economic necessity for the state - I'm intelligent enough to understand that the proposed cuts to higher-ed will not disappear in their entirety. But steps have been taken to alleviate these cuts to a generous degree. For the legislature to abandon those steps in the session's waning moments would be devastating to Louisiana and be indicative of the terrible lack of efficiency in the state's style of government.

I'm confident that the legislature will at least alleviate a huge portion of the proposed cuts, and once the allocation is made to higher education, those charged with efficiency of that sector will take a close look at the state's institutions and make allocations wisely and accordingly. I'm certain you can deduce where I stand on that front, but I will reserve opinions on that for a later post.

Read up on the latest developments in the Advocate:

http://www.2theadvocate.com/news/politics/48740312.html?showAll=y&c=y

Senate Finance Committee - Knights in Shining Armor?

As we posted previously, the Senate Finance Committee has been doing diligent work to help preserve as best they can Louisiana's higher education by finding alternatives to a massive $219 million budget cut for this upcoming year.

The Committee has not only called for use of Louisiana's "Rainy Day" fund - a combination of surplus and other funds for use during, you guessed it, economic crises - but they have also passed SB 335, which will stall tax breaks and put a freeze on deductables from state income tax at 65%. This bill is contentious in both the House and the governor's office, but the Senate seems confident in its passage.

With SB 335 alone, the proposed cuts will drop more than half to $100 million - still a hefty cut but relatively much more manageable for Louisiana's higher-ed institutions. At these levels a cut to LSU would certainly be less drastic than previously expected. And if a portion of the rainy day funds go to education, the effects would be even less. Understandably, many areas of the state's economy need attention, and those most important areas should receive rainy day consideration.

SOS - Save Our Schools thinks education should be right there at the top of the list.

Source: http://www.2theadvocate.com/news/46871232.html?index=14&c=y

C.B. Forgotston: Flaw in "Rainy Day Fund"?

http://forgotston.com/

I just read where Commissioner of Administration Angele Davis said there was a “design flaw” in the Budget Stabilization Fund (a.k.a. the rainy day fund). (See story here.) As a result there would be little to no net revenues for the upcoming state budget if the leges used $250 Million of the fund.

There is no "design flaw." The fund was intentionally crafted to limit the flow of oil and gas revenues into the State General Fund ("SGF") in hopes that the state would reduce it's dependency on oil and gas revenues.

Alternative solution

If there is no desire to reduce the dependency on oil and gas revenues, there is alternative to refilling the fund.

The $250 Million taken out of the fund could be immediately replaced with $250 Million of the $860 Million 2007-08 surplus (per Const. Article VII, Section 10(D)(2)(d)) and thus all oil and gas revenues would continue to flow into the SGF and would be available for expenditure in the fiscal year that begins July 1.

This process has been used in the recent past to force more oil and gas revenues to flow into the SGF.

This scenario would increase revenues for the Operating Budget by $250 Million. There would, however, be less surplus money to spend on local and NGO capital projects.

If the goal is to forestall cuts to the Higher Education and Heathcare operating budgets this process accomplishes it.

Poor priorities not a flaw

Seems to me the only “design flaw” in the fund is the flaw that has always been in the state budget process -- poor priorities.

The comments from the commissioner begs the question of why are we just now learning of the "design flaw" in a fund that was originally put into the constitution in 1990 and was actually used in 2002? This is not her first time to work for a governor in the Division of Administration.

What am I missing?

C.B.