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Story Archives: Playing fast and loose with the people's money
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Playing fast and loose with the people's money
 (Editor's Note: What a difference two years make. The following column is a reprint of one published by Sam Hanna Jr. May 23, 2007.)
The State of Louisiana has some $830 million in surplus revenues dated to the 2005-06 fiscal year, and officials project the state will have a roughly $1.2 billion budget surplus at the end of the 2006-07 fiscal year. Add to that another $1.3 billion budget surplus, which officials say will exist when the 2007-08 fiscal year comes to a close.
Meanwhile, the Revenue Estimating Conference now claims the state will have another $100-plus million on hand at the end of the current fiscal year and another $100-plus million lying around at the end of the fiscal year that ends on June 30, 2008.
Got all of that?
Confused?
You should be.
That's because state officials are playing fast and loose with revenue projections and expenditures, which is somewhat dangerous, especially in an election year.
Since 2007 is an election year you are witnessing a great deal of horse jockeying at the Capitol to paint the state's fiscal picture as rosy as possible. You also are witnessing the Legislature as a whole trying to spend as much money as possible to curry favor with the people who matter the most -- the voters. Or the special interests groups.
And that's exactly what's going on in Baton Rouge in the regular session, which got underway less than a month ago, a regular session that has produced little of substance thus far.
Most discussion of granting the taxpayers of Louisiana a meaningful tax cut, or giving back money that belongs to the taxpayers, has been received like a doctor telling a patient that he's got cancer. It hasn't been that bad but not far from it.
Discussion, though, of pouring more money into education, including teacher pay raises and millions more for the state's colleges and universities, is as popular as taking a child to Toys-R-Us. That's an understatement.
Let's not forget about the hue and cry for more money to repair roads and bridges from one end of Louisiana to the other, though there's been no talk about turning the state Department of Transportation and Development on its ear to determine whether there's a more efficient manner in which to tackle the backlog of the state's highway construction needs.
Let us not forget as well that not one word has been spoken about reforming the manner in which money is spent on education, or directing more money to the people who matter the most in the field of education -- the teachers in the classroom, not the bureaucrats and the union leaders who whine about needing more money to spend.
To sum it up, revenue officials are saying the state has roughly $3.5 billion in surplus revenues at its disposal, and the fine folks in Baton Rouge have grand plans to spend the money.
The truth, though, is Louisiana can only count some $830 million of the $3.5 billion as money in the bank. That's the $830 million in surplus revenues left over from the 2005-06 fiscal year, or the only money that's been certified as surplus revenues.
The rest, or roughly $2.7 billion, is projected revenues, or income generated by taxes and fees that the state expects to collect.
That's the sticky point. The state expects to collect the $2.7 billion, meaning it's not money in the bank.
Whether the $2.7 billion will actually be collected isn't the only problem facing lawmakers as they make plans and work toward carrying out those plans to spend the projected surpluses.
No, legislators and revenue officials must determine what's recurring revenue and what's nonrecurring revenue.
In other words, the powers that be have to figure out (rightly or wrongly) how much of those projected surpluses can be spent on recurring expenses such as teacher salaries. They also have to figure how much money can be spent on nonrecurring expenses such as fixing a bridge or retiring some of the state's mountainous debt.
Lost in the shuffle has been any honest discussion about what's fueled the state's so-called new-found wealth. That would be a spike in tax collections generated by the massive spending throughout Louisiana thanks to the billions of dollars the federal government poured into the Sportsman's Paradise in the wake of the 2005 hurricanes.
No, the economy in Louisiana hasn't been somewhat robust because of the entrepreneurial spirit that exists in the hearts and minds of the people of the state. It's been rather robust in some corners because of the federal government's largesse.
What happens when it ends?
Already, we're seeing signs of the Louisiana economy cooling off in a big way. You only need to look at the rather disappointing figures the Revenue Estimating Conference released late Tuesday.
With that backdrop in mind, when was the last time we were disappointed with the news that the state was only expecting an additional $200-plus million in revenues over the course of two fiscal years?
Still, there's no escaping, or ducking, the cold, hard reality that revenue officials, Gov. Kathleen Blanco and the Legislature as a whole are playing fast and loose with state revenues that may or may not exist.
It's an election year, though.
Can you imagine how funny the money would appear if Blanco was running for re-election? |
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