After months of drama, Louisiana lawmakers finally know how much money is available to spend this year. Now begins almost two months of haggling over how to spend it.
The Revenue Estimating Conference on Wednesday recognized an additional $119 million in anticipated general fund money for the fiscal year that begins July 1. That’s $119 million more than in the current House Republican budget bill, which was based on the last official estimate from June, and about $19 million less than Gov. John Bel Edwards had proposed spending.
The House is likely to amend its bill to spend more, and Edwards will have to settle for less than he had hoped. But compared to some of the recent budget fights, which required three regular sessions and seven special sessions to resolve, this one should be rather amicable by comparison, Edwards said.
“This is going to be relatively easy to resolve,” he said, speaking with reporters on Thursday.
Edwards wants to spend a little more than $100 million on raises for teachers and support personnel, and most legislators seem to be on board with that. But he would also like to add about $39 million to the per-pupil block grants for K-12 education, which is a bit more controversial.
The state Board of Elementary and Secondary Education already has approved a Minimum Foundation Program budget that includes the governor’s proposed increases. The legislature is not allowed to change the MFP, though they can reject it and send it back to BESE for alterations.
“We haven’t increased the block grant portion of the MFP in a very long time, and I think that that’s important to our school districts, so I’m not going to ask BESE to revisit that,” Edwards said. “It may be something that the legislature chooses to do, and if so, then I will work with the legislature to figure out what we do with the money that gets freed up.”
A number of legislators want to spend more on early childhood education, and Edwards agrees on the need. The governor has suggested creating a dedicated revenue stream for early childhood education, perhaps by legalizing sports betting, though it’s unclear how much money that would raise even if it is legalized.
“We go through this dance every year,” Gary Jones, president of BESE, said of the potential back-and-forth with the legislature. But this year, when there is no single, executive budget that everyone is working from, the dance gets a little more complicated.
There was a time when BESE could expect a 2.75 percent bump to the MFP every year, but the 1.375 percent increase Edwards has proposed would be only the second in a decade. School systems would have to pay for the associated benefits costs from teacher pay raises out of the block-grant portion of the MFP, Jones said.
“This year’s an election year, and I think it’s safe to say everybody wants to get some credit for a teacher pay raise,” he said. “From BESE’s perspective, we want the teachers to get a pay raise, and we want the districts to be able to afford it.”
There are actually three pots of new money to fight over. There is an additional $119 million for next fiscal year. The REC also officially recognized a $308 million surplus from the end of the last fiscal year.
The surplus is considered “one-time money” and according to the state constitution cannot be spent on ongoing expenses. At least 10 percent of any surplus is supposed to be used to pay down retirement debt, and another 25 percent goes to the Budget Stabilization Fund, better known as the “rainy day” fund. So that leaves about $200 million that can be spent on things like construction or coastal restoration projects.
The REC also identified $110 million in unbudgeted additional money for the current fiscal year. Legally, lawmakers can spend that money on anything they want, but typically that money goes to agencies that had more expenses than were budgeted for during the current year, said Steven Procopio, policy director with the Public Affairs Research Council of Louisiana. Prisons housing more prisoners than expected, for example.
Last year, legislators agreed to spend $43 million above what they had budgeted on prisons, law enforcement and homeland security if additional money materialized. That deal evaporated when the REC was unable to settle on a revenue estimate by Jan. 1, but the agencies that requested that money likely will be lining up for the newly available dollars, Procopio said.
Any of the unbudgeted $110 million not spent this fiscal year would become surplus dollars for next year, though Procopio doesn’t think that will happen.
“It’s just not likely in an election year that they’re going to somehow not spend money,” he said.
But Cameron Henry, the Republican chairman of the House Appropriations Committee, suggested it might make sense to spend some of the recurring money on one-time expenses like road projects, to prepare for the day when the temporary sales tax that was partially extended last year expires. House Speaker Taylor Barras said he hoped lawmakers wouldn’t spend all of the new dollars. And a few legislators note that some economists are projecting a national recession in the near future, suggesting it might not be wise for the state to commit to too much long-term spending.
Henry said he has been working with the state treasurer’s office to see if some agencies’ general fund requests can be supplanted with fees or self-generated revenue. In the meantime, his Appropriations Committee has been using House Bill 105, based on last year’s numbers, as the baseline.
“Most of the agencies that come before us, 99 percent of them always ask for additional revenue,” he said.