Surplus dispute threatens construction projects
The ongoing dispute over whether state government finished last fiscal year with a budget deficit or a surplus could soon have real-world ramifications. Melinda Deslatte of the AP reports that state Treasurer John Kennedy is refusing to sign off on the paperwork needed before the state can issue $200 million in bonds to pay for construction projects. According to Kennedy, Louisiana finished the 2014 fiscal year with a $141 million deficit. But Gov. Bobby Jindal’s administration insists the state had a $179 million surplus—a $319 million difference that could play a major role in how policymakers craft next year’s budget.
Kennedy wants the (bond) documents to spell out there is disagreement over the surplus figure. “You can’t use puffery. You can’t use hype. You can’t use BS. When I sign this document, I swear to the world that it’s accurate,” he said. “I am not going to mislead investors.” Gov. Bobby Jindal’s chief budget adviser, Commissioner of Administration Kristy Nichols, said her office submitted language clearly explaining the additional cash reserves the Jindal administration identified as a nearly $179 million surplus. “It’s not controversial language. It’s pretty straightforward,” she said.
Fiscal Office weighs in on budget dispute
While Kennedy and Commissioner of Administration continue their public bickering, the nonpartisan Legislative Fiscal Office tried to clear things up late last week. Writing in the latest edition of “Focus on the Fisc,” chief economist Greg Albrecht notes that the state did indeed spend $141 million more last year than it collected in tax revenues. But the administration is also correct that the state finished the budget cycle with $179 million “cash liquidity” in its bank account.
These funds make up the cash position of the general fund, and are comparable to the checking account balance that many households have at the end of each month’s bank statement reconciliation.
But Albrecht cautions against treating this money as “surplus” cash to be spent on one-time uses such as construction projects, or rolled into next year’s budget. Without some money in the bank at the end of the fiscal year, the state could have trouble paying its bills when a new year begins.
This cash liquidity allows the current year’s obligations to be funded while the prior year’s obligations are being closed out. Without this cash liquidity, the payment of some obligations may have to be delayed during the transition period across fiscal years.
More opposition to nursing home constitutional amendment
Add the Arc of Greater New Orleans to the long list of organizations opposed to Amendment 1 on the Nov. 4 ballot, which is a special deal crafted by the powerful nursing home industry to protect their Medicaid budget at the expense of other health care providers. Writing in The Times-Picayune:
You see, Amendment 1 would make it very difficult to reduce rates for nursing homes and institutions for people with developmental disabilities in times of budget cuts. On the surface who could argue with that? But what’s not being said is that by protecting rates for nursing homes and institution, there will be less money left to support community services for these vulnerable populations, as well as for higher education.
Meanwhile, The Times-Picayune also notes concerns by the Legislative Fiscal Office.
The fiscal office has said both amendments will reduce flexibility for future governors and the Louisiana Legislature to make reductions or redirect certain types of Medicaid funding. Specifically, the governor and the legislators will not be able to make deeper cuts to individual hospitals or nursing homes if they feel that is necessary.
Oil and gas industry doesn’t want to pay to fix the coast
From the department of the obvious: The president of the Mid-Continent Oil and Gas Association is not pleased with the recent call by Advocate columnist Quin Hillyer and coastal activist John Barry for a new oil and gas processing tax to help raise some of the $50 billion it will take to restore Louisiana’s coast. In a letter to The Advocate, Chris John calls it “fool’s gold” and suggests the state stick with the status quo.
There are a variety of funding sources that will help the Master Plan in its mission, most notably funds from the Gulf of Mexico Security Act and the RESTORE Act. The Master Plan recognizes the synergy between short-term needs and long-term investments.
Number of the Day
0.7 percent — Year-over-year growth in state tax collections, from FY 2013 to 2014. (Source: LFO)