House GOP Rejects State Economists' Revenue Forecast

Dec 13, 2019
Originally published on January 2, 2020 5:18 pm

For the second straight year, Republican lawmakers have refused to accept state economists’ forecast of expected revenue in the upcoming fiscal year, a crucial benchmark for crafting the state budget.

The partisan stand-off over the budget could also delay funding for several projects in Louisiana, including the reopening of the Algiers Ferry, coastal restoration in Plaquemines Parish and payments associated with the Harrah’s Casino contract.

In Thursday’s meeting, Representative Cameron Henry (R-Metairie), on behalf of House Speaker Taylor Barras (R-New Iberia), voted down updated forecasts presented by the Legislative Fiscal Office and pision of Administration.

Henry cited economic uncertainty and a disagreement between the legislature and State Treasurer John Schroder over $21 million in unclaimed property as reasons for his ‘no’ vote.

“Those projects are important, but not as important as the overall state budget process,” Henry said.

The move gives Republican legislators more leverage as they push for a smaller state budget.

By law, spending levels in the governor’s executive budget proposal must match projections that have been unanimously approved by the Revenue Estimating Conference or REC.

Both state economists present predicted increased revenues that would have funded those projects and provided between $103 million and $161 million in additional funds that Governor John Bel Edwards could include in his executive budget proposal for the upcoming fiscal year.

One year ago, Barras rejected economists optimistic revenue forecasts, saying more time would allow the panel to make a more accurate assessment. In February, Edwards proposed a budget that included $130 million that had not yet been recognized by the REC.

The stalemate held through the opening weeks of the legislative session, giving House Republicans cover to block Edwards' budget proposal in committee while advancing their own legislation. The REC eventually recognized $119 million in additional revenue.

Jay Dardenne, Commissioner of Administration and REC member, said Thursday’s vote amounted to partisan obstructionism.

“The same thing is going to happen this year that happened last year,” Dardenne said. “Confusion, uncertainty, angst by people who are going to wonder, ‘What’s in the budget? What’s not in the budget?’ And then next spring we’re going to have more money and all the sudden it’s going to happen.”

The REC was established to allow non-partisan academics to determine how much money the state could spend -- not politicians.

Outgoing Senate President John Alario said that was an improvement over the highly-politicized system of days past, which allowed lawmakers to massage the numbers to fit their needs.

“Somebody on the floor of the House of Representatives or the Senate would simply get up and say ‘Let’s raise the price of oil 50 cents,’” Alario said. “That certainly didn’t work well for the state.”

Henry stood by his decision.

“Is it different that what we’re doing in previous years? Absolutely it is,” Henry said. “I think it’s time as you see the change in the legislature on both sides that we start doing things differently.”

He suggested that in the future, the panel should hold off on adjusting revenue forecasts until the end of the fiscal year.

But that proposal does not mesh with the current system in which many projects rely on mid-year funding adjustments.

That was apparent in a meeting of the Joint Legislative Committee on the Budget hours after the REC failed to recognize the projected increase in revenue.

Shawn Wilson, Secretary of the Department of Transportation and Development, said the restoration of the ferry service between Algiers Point and Canal Street in New Orleans was dependent upon the availability of funds needed to pay $200,000 for newer boats.

Rep. Gary Carter (D-New Orleans) said his constituents rely on the ferries.

“I have workers who live in affordable housing who are able to walk to work by catching the ferry and working in the hotels of downtown New Orleans,” Carter said. “They rely on public transportation. This is a matter of supporting those families.”

The REC will not meet again until new legislators are sworn in next year.

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