Special Session: House-Senate brinksmanship

Special Session: House-Senate brinksmanship

The Legislature has until midnight on Wednesday to find agreement on closing a $304 million mid-year budget gap.

The Legislature has until midnight on Wednesday to find agreement on closing a $304 million mid-year budget gap. Here is where things stand after a busy weekend at the Capitol:

  • The Senate voted for a budget bill that uses $99 million from the state Rainy Day Fund, which is less than Gov. John Bel Edwards proposed but more than the $75 million draw approved by the House.
  • The Senate version of the budget spares the departments of Corrections and Education from budget cuts sought by the House. But it includes $10 million in projected savings from unfilled job vacancies in state government – which is double the amount that the Edwards administration says it can live with.
  • In the House, members voted 47-46 for an alternate budget bill that doesn’t use any rainy day money. While the bill failed to pass (it needed 53 votes), the fact that it drew so much support is seen as a bad omen for the 70-vote supermajority needed to tap the rainy day account.

Nola.com/The Times-Picayune’s Julie O’Donoghue has a rundown, including a helpful spreadsheet breaking down the cuts, by agency, in the various proposals. And she explains the dilemma that must be resolved:

The House leadership doesn’t currently have the votes it needs to tap the $75 million in rainy day fund money that it included in its own plan, let alone the $99 million the Senate plan relies upon or the $119.6 million the governor wanted. Using the rainy day fund requires separate votes from the ones already taken on the budget plans — and the vote threshold for accessing the rainy day fund is higher. Budget bills can pass out of both chambers with a simple majority, but tapping the rainy day fund requires a two-thirds majority of both the House and the Senate.

 

Controversy over TOPS

The Advocate’s Will Sentell delves into the debate over TOPS and whether recipients of the popular merit scholarships should be required to complete 30 credit hours per academic year – the amount needed to finish college in four years. The Board of Regents suggested the change in a recent report (the current requirement is 24), but is hearing plenty of pushback from the public.

“Requiring 30 hours per year is not fair to working students,” according to one email sent to higher education officials. Another called the proposal “a bit overzealous.” “By raising the number, you make the semester harder on kids and even more so if they work while going to school,” according to a third comment.

Sen. Conrad Appel and other officials have said students should be able to get waivers from the requirement if they work. But Sen. Sharon Hewitt, who sponsored the bill that led to the Regents’ recommendation, appears to be backing away from the 30-hour rule. The change would need approval from the Legislature.

 

In defense of one-time money
As the Capitol debates the use of one-time dollars to solve the mid-year budget shortfall, The Advocate’s Jeff Sadow looks at what that term actually means – and concludes that it’s not always a bad strategy for financing state services. He notes that one-time money takes many forms, including bonus payments, shifting spending from one fiscal year to the next, and the infamous “fund sweeps” popularized by former Gov. Bobby Jindal.

The state has hundreds of dedicated funds into which money pours, often in amounts greater than actual required spending needs, much less whether the need really is that important compared to others. Further, these excess dollars accumulate over the years, creating pools of money paid in by the citizenry directly or indirectly that otherwise would sit idle unless converted into one-time money by transferring some of the proceeds elsewhere. For example, Edwards’ proposal seeks to vacuum up around $100 million lying fallow in many different pots to resolve the shortfall.

 

The cautionary tale of Westlake
The small southwest Louisiana city of Westlake sits at the center of Louisiana’s industrial renaissance. Just outside the city limits sits the Lake Charles Chemical Complex, an $8 billion investment by Sasol Corp.. But the fruits of this massive investment have not helped local government. As Marilyn Monroe of the American-Press reports, the city itself is nearly broke – though it’s slightly better off than two years ago, when it was a month away from bankruptcy. Residents are paying higher property and utility taxes, and begging the state for relief.

Two 10-year sales tax renewal propositions on are the March 25 ballot with a combined annual revenue estimated at $1.5 million. (Mayor Bob) Hardey said the taxes make up 25 percent of the city’s operating budget. The city is covering its expenses, but it’s in no position to handle a major disaster, he said. Hardey said that the city should have $4 million in reserve but instead has about $400,000 in an account. He said his goal is to get the reserve where it needs to be within the next two years. “We are in the black, but it is like the water is up to our necks,” he said. “And we could go under at any time if a major event happens such as a hurricane, ice storm or any major infrastructure issue.”

 

Number of the Day

$23,400 – Median wealth of a black American with a college degree, compared to $180,500 for a white person. (Source: Economic Policy Institute)