Last Modified: Thursday, December 19, 2013 1:20 PM
Remember when your parents told you the extra money you had was “burning holes in your pockets?” They knew you could hardly wait to spend it.
Gov. Bobby Jindal and some members of the Legislature are facing a similar situation after learning the tax amnesty program that lawmakers used to balance this year’s budget came up with $235 million extra.
Well, maybe it isn’t that much money. The state Department of Revenue apparently wants $78 million to cover the cost of handling the amnesty program. And $6 million of that is to pay attorneys who helped the department settle pending court cases.
At first glance, $78 million sounds awfully high. You would think the Department of Revenue would have enough employees in its ranks to pick up most of the collection costs.
Another $67 million involves tax credits that may not translate to money in the bank.
The bottom line is there could be anywhere from $90 million to $157 million left over that legislators can count on.
Jindal wants the extra money for higher education and health care, the two major unprotected areas of the state budget.
Sen. Jack Donahue, R-Mandeville, chairman of the Senate Finance Committee, would like to see some of the extra money go into the state’s Rainy Day Fund.
Rep. Jim Fannin, D-Jonesboro, chairman of the House Appropriations Committee, said it could be used on one-time projects like college campus construction.
Conservative members of the Legislature, called the Fiscal Hawks, want to ensure the funds aren’t spent in the operating budget because that money won’t be available year in and year out.
Rep. Brett Geymann, R-Moss Bluff, a leader of the hawks, said, “It (using extra funds in the budget) just leads to the same problems again next year. You end up scrambling to try and find a way to pay for something that is recurring that you paid for with non-recurring money this year.”
The Revenue Estimating Conference will decide whether the extra amnesty money is recurring or non-recurring. Revenues that can be counted on from year to year are called “recurring.” If it’s a one-time thing, it’s “non-recurring.”
Jim Richardson, an LSU economist, is one of the REC’s four members. The others are Senate President John Alario, R-Westwego, Speaker of the House Chuck Kleckley, R-Lake Charles, and Kristy Nichols, state commissioner of administration, who is the governor’s representative. Alario and Kleckley can also designate others to represent them.
The REC vote has to be unanimous, and Richardson told The Times-Picayune he is leaning toward classifying most of the amnesty money as non-recurring.
“I know how people would like it declared, but I feel no pressure,” he said. “You call the game as you see it.”
The state constitution is clear about situations like this one. It says the extra money, from whatever source, has to be spent on one-time expenditures. Those are things like highway and other construction, coastal restoration, the state’s Rainy Day Fund that has been hit by lawmakers in tight financial times and paying down state debt.
Unfortunately, the constitution seldom stands in the way of those who know how to manipulate devious financing. It happens every year.
Rep. Joel Robideaux, R-Lafayette, chairman of the House Ways and Means Committee, sponsored the amnesty legislation. Critics said it was a risky way to fashion a budget because the funds couldn’t be counted on to materialize. However, it was even better than expected and that is because previous amnesty experiences were used to make the case the money would be there.
Robideaux talked to legislators in a letter about what happened in 2009 with $482 million in amnesty money. He said a little creativity directed half of the money as recurring. The rest was called non-recurring and went into the Coastal and Restoration Fund. Lawmakers then transferred the money out of the coastal fund and into the budget for health care, a tricky maneuver that didn’t fool anyone.
“The bottom line is that all of the $482 million in amnesty proceeds eventually ended up in the operating budget,” Robideaux said in his letter.
The Advocate said Jindal was asked how he would get this year’s amnesty surplus into the operating budget.
“Let’s see how many dollars there are,” he said. “Secondly, let’s actually sit down and work with the legislative leadership. There are a lot of steps… My point is that ultimately those dollars should end up in education and health care. I think those are the two best investments for our state.”
It sounds as though the governor wants to do some fancy money shuffling again.
Geymann said it best: “I would like to see us avoid the gimmicks of the past…”
Jindal and the Legislature should follow the constitution that is crystal clear about how the money can be used. They should just obey the law and find money for higher education and health care somewhere else. Goodness knows both areas of the budget need it after six years of cuts and more cuts.