With two weeks to go in this Regular Session, the chaos over the state budget appears to be higher than normal for this point in the process.
Deep philosophical splits among Republicans, fed in no small measure by the power struggle between Governor Jindal and Senator Vitter, have produced a situation -- at least in the House -- where Democrats are the largest voting bloc on the floor.
Since Vitter-backed forces seized control of the budget on the House floor on Thursday and Friday of last week, it has become clear that Governor Jindal is dependent on Democrats for the votes to pass his version of the budget.
That point was driven home on the floor of the House on Thursday of this week, when Democrats provided the majority of the 63 votes that sent HB-822 to the Senate for consideration. This is the bill that contains the (wrongly named) one-time money for use in the budget, which the Vitter extremists in the House had revolted against last week. Without Democratic votes, the bill would not have passed because of the divided Republican caucus.
A Bitter Vitter Fight
Since last week's Republican revolt against Jindal in the House, the war of words between the two camps has only escalated. Vitter congratulated his acolytes in the House for their victory and asked his supporters across the state to support them. Republican State Treasurer John Kennedy jumped into the fray, with a public letter to Jindal claiming the administration's budget could survive without the money in HB-822 if it would only follow his sage advice.
Commissioner of Administration Paul Rainwater left Senator Vitter alone but blasted Kennedy in a statement that was purported to be a point-by-point rebuttal of the Treasurer's suggestions. Eight of the leaders of the House GOP budget insurrection then bl asted Rainwater in a statement of their own.
With tempers running this high, it is possible that Jindal's ability to get a budget passed will come to rest more squarely on the shoulders of Democrats and the few Republican lawmakers who don't fall into the Vitter camp.
Lesser of Two Evils Is Still Evil
There is no doubt that the Jindal budget is a better budget with the funds included in HB-822 than the budget that House radical Republicans produced a week ago without those funds.
But, if we've learned anything over the five years of Jindal's tenure it is that his budget will not make it through the fiscal year without mid-year budget cuts having to be made. The current fiscal year budget, enacted by in the 2011 Regular Session has turned out to be $500 million out of balance ($300 million in cuts in December and $200+ million needing to be cut now).
There's that old saying, "The first time you make a mistake it's an accident, the second time it's on purpose, and the third time you make that mistake, it's a habit." The Jindal administration has an established habit of wringing budgets out of the Legislature that frequently don't make it out of the calendar year, but never survive an fiscal year. Treasurer Kennedy pointed this out in his letter to Jindal.
So, Democratic lawmakers will be asked to bail out the administration on a budget that they have considerable reason to believe has little or no chance of actually surviving the fiscal year. Mid-year cuts are brutal in the areas that are important to Democrats and their constituents -- health care and higher education.
We already know the consequences will be dire. The LSU Health Sciences Center Hospitals have been targeted for a nearly 60% reduction in funding under the Jindal budget, with still more draconian cuts proposed by the Vitter faction in the House. Likely mid-year cuts will close the gap between those two budget approaches.
Higher education, originally thought to be spared from cuts in the upcoming fiscal year, finds itself back on the chopping block due to the April findings of the Revenue Estimating Conference.
Democratic Constituencies as Jindal's Budget Human Shields
Jindal and Rainwater have all week been railing against the budget passed by the House, warning aginst the kind of draconian cuts the administration has repeatedly made during each fiscal year Jindal has been Governor. They made these warnings, too, with the full knowledge that they are very likely to order the very cuts they warn against now by by the end of the 2013 Fiscal Year because the budget numbers will not hold up.
It is a brazen display of cynicism on Jindal's part.
What much of the drama of the next two weeks of the session will be about will be to see if Democrats in the Legislature will fall for the trick. Or, whether they will recognize both the trick AND the leverage they hold. If they use their leverage, Democrats in the House and Senate could define a price for their votes for the Governor's budget that could not only shift the balance of power in the Legislature, it could change the terms of the budget debates for years to come.
It Gets Worse
|Moller: Louisiana at a Tax Break Accountability Moment|
In this video, Jan Moller of the Louisiana Budget Project
says the state's revenue picture will only worsen next year due to budget agreements made in Washington, combined with the state's tax exemption program that denies state government of at least $4.8 billion dollars in tax revenue that is on the books every fiscal year.
The Louisiana Department of Revenue, by law, is required to compile an annual report on the costs of the tax exemptions to the state. Those reports, called the Tax Exemption Budget, can be found here.
The Department says that tax exemptions are expenditures of state tax dollars. Here's the quote from page 3 of this year's report: "Tax exemptions are tax dollars that are not collected and result in a loss of state tax revenues available for appropriation. In this sense, the fiscal effect of tax exemptions is the same as a direct fund expenditure."
Tax Exemptions Are On The Table
Like Treasurer Kennedy, Moller suggests that the time has come to review the 464 exemptions that are on the books with just as critical an eye as legislators give line items in the budget itself. On Friday afternoon, the Baton Rouge Business Report said that the head of the Senate Finance Committee was taking a page from Kennedy's book -- name a commision; take some time; slow down what they clearly percieve to be a gathering storm against more cuts.
Kennedy, in his letter to Jindal, called for the creation of a blue ribbon commission to begin a six-month review and analysis of the exemptions, to be followed by a Special Session to address the recommendations of that commission. Kennedy's schedule would have the commission complete its work around the time that the Revenue Estimating Conference can be reliably counted on to issue its next dire mid-year report in which they will pretend that they are shocked to report yet another revenue shortfall.
The problem is that six months into the fiscal year (before the commission finishes its review) would then be followed by a minimum of two months or so before a special session. The result would be that the budget cuts made in Jindal's 'better' budget would already have been made, plus still more cuts that are the likely result of the Revenue Estimating Conference's December 2012 meeting.
That puts relief too late for higher education; too late for the LSU Hospitals; too late for mental health services; too late, in short, to do anything to stave off the effects of the budget that Jindal now says he is trying to protect the state from enduring.
The Jindal Emergency Is Now
Five years of cuts concentrated in healthcare and higher education have inflicted too much damage for these sectors to endure more.
Over the past five years, higher education has been cut 53% and tuition costs have leapt 30%. While education leaders protest the cuts, the increase in tuition that they applaud is pricing post-secondary education out of the reach of many Louisiana families. Funding cuts to community and technical colleges have already restricted course offerings. More cuts would threaten the viability of this system.
Cuts to the LSU Hospitals are threatening the viability of community hospitals who are not financially able to handle the shift of the uninsured patient load into their facilities. The LSU Shreveport Medical School is in jeopardy under the current House budget and would be so in the event of mid-year cuts in the Jindal budget.
This is the budget Democrats are going to be asked to pass for Jindal. It is a budget that will deliver more pain to Democratic constituencies, with more likely to come later in the fiscal year. Jindal gets the win over Vitter now, with the promise of more draconian cuts coming later. What do Democrats get in return for helping the Governor and hurting their constituents?
Fast Track Kennedy?
The only thing that changes the dynamic of the budget new revenue. Kennedy has put the $4.8 billion in tax exemptions in play, although at too slow a pace to avoid a castrophe for health care and higher education.
The perception in the Capitol is that Jindal cannot be taken at his word. But, the Democrats have the votes he needs to get his budget passed.
The challenge for Democratic legislators in the final two weeks of the session will be to figure out if they can extract a commitment from Jindal to fastrack Kennedy's special session on exemptions early in the 2013 fiscal year in return for their votes for his budget in this session. The bigger challenge will be get the Governor keep his word.