Gov. Bobby Jindal’s administration is using creative financing maneuvers to get around limitations on surplus money and other sources of patchwork financing for next year’s budget.
Jindal has to contend with constitutional restrictions on how he can spend $181 million surplus cash, for items such as debt payments, construction work, coastal projects and other areas that don’t require repeated funding year after year.
He’s also had to meet new hurdles added to the budget process by a group of Louisiana House Republicans, who were trying to limit the use of piecemeal funding from items such as drug settlements and fund balances to pay for ongoing operating expenses in state government.
But the Republican governor is grappling with budget gaps and trying to keep from making new cuts to programs in the next fiscal year that begins July 1, after six years of reductions.
To keep his 2014-15 budget proposal balanced while adding new dollars for education and health care programs, Jindal used tactics that meet the restrictions on the one-time funds, but also manage to funnel $450 million of it to help pay for next year’s ongoing expenses.
Commissioner of Administration Kristy Nichols called the proposal “a very responsible and balanced budget” that invests new money in health care and higher education. She said it didn’t use one-time money for continuing expenses.
“We’re proud that we have met that goal,” she told lawmakers.
However, the plans are running into criticism that they are budget sleights of hand, meeting technical compliance, but violating the spirit of controls designed to keep the state from facing annual budget shortfalls when the sources of financing don’t reappear annually.
“It’s a gimmick,” said state Rep. Brett Geymann, R-Lake Charles. “I see the same problems that we had year after year after year.”
In one maneuver outlined by the non-partisan Legislative Fiscal Office, Jindal proposes to pre-pay $210 million in debt with the patchwork funding, which frees up the same amount of state general fund money to spend on operating expenses.
But that only frees up the money for one year.
Another piece of the governor’s spending plans has the state taking $50 million in cash from the New Orleans convention center and replacing it with long-term borrowing paid off with interest.
Jindal also proposes to put $51 million in one-time cash into the state’s coastal protection fund, meeting the requirement the dollars be used on one-time projects. Then, the governor proposes taking a similar amount from the fund to plug into next year’s operating budget.
“It’s absolutely money laundering,” Geymann said.
The Public Affairs Research Council of Louisiana, a government watchdog group, said the approach diminishes the integrity of a fund that will be used to collect and spend billions of dollars in Gulf oil spill penalty money.
“State decision-makers should not view the budget process as a game of finding convenient means to balance the budget, but as an opportunity to reinforce sound fiscal policies that have been put in place through various rules, statutes and constitutional provisions,” PAR said in an analysis.
The Jindal administration defended the coastal fund swap as helping it avoid cuts.
“This policy allows us to maintain our investments in higher education, health care and our state’s infrastructure without raising taxes on Louisiana families,” Doug Baker, a spokesman for Jindal’s Division of Administration, said in an email.
Lawmakers will renew the annual debate over the financing maneuvers when their regular legislative session begins March 10.
Rep. Jim Fannin, chairman of the House Appropriations Committee, said he doesn’t agree with some of the governor’s budget proposals. But he said he doesn’t see a lot of interest from lawmakers to make cuts and skip the patchwork funding.
“People in Baton Rouge like to spend and don’t like to manage. I’ve found very few folks that are not willing to spend,” Fannin, R-Jonesboro, said.