Government & Politics
 

Fiscal Hawks flew high in legislative session now ended, defying Jindal

Late in the 2008 legislative session, four conservative state representatives licked their wounds one night at Walk-Ons, a sports bar near Louisiana State University.

“We had just gotten our ass kicked on a lot of things,” one of them, state Rep. John Schroder, R-Mandeville, remembered Thursday. “The left hand didn’t know what the right hand was doing. We decided we would come back better prepared on the budget.”

The four grew into a dozen the following year, and they met regularly for tutorials on budgeting state money and ways to cut government spending. In 2012 they had attracted enough support to formally organize and name themselves the Budget Reform Campaign. They criticized Gov. Bobby Jindal from the right, for spending money they said the state didn’t have. The press soon dubbed them the “Fiscal Hawks.”

During the annual legislative session that ended Thursday, the Fiscal Hawks emerged as a powerful group – powerful enough to force Jindal and Senate President John Alario, R-Westwego, to back down and accept key changes in how the state will spend its money next year and years to come. Those changes, the Fiscal Hawks say, will produce more honest budgets and lessen the likelihood that the state will continue having to make debilitating spending cuts midway through the fiscal year, something that has happened during each of Jindal’s five years in office.

The 30 or so Fiscal Hawks played a decisive role this year because they formed an unlikely alliance with about 40 House Democrats, giving them a working majority in the 105-member House. The alliance, however, didn’t sit well with fellow Republicans who wanted to revel in constituting a House and Senate majority for the first time since Reconstruction. Fiscal Hawks and Republicans allied with Jindal engaged in private squabbling over the budget during the past several days.

“Some Republicans believe we sold our souls,” said Schroder, a key Fiscal Hawk. “We didn’t sell our souls. Enough trust and knowledge was built up over the past five years where people were finally willing to stand up to the administration and say, ‘No, we’re not going to do this. There’s got to be another way to do it. Be responsible in looking at the dollars.’”

Schroder also pointed out that Jindal won approval for the budget in the past two years by enticing more House Democrats than Republicans to support it.

“It’s OK for [Jindal and his aides] to buy Democrats with millions of [dollars for construction] projects,” Schroder said. “We didn’t have anything to offer the Democrats – not committee assignments, parking spaces [at the Capitol], chairmanships or apartments at the Pentagon [Barracks, a coveted residence]. We only had our word and that our fix would not cause cuts that Democrats fear.”

Jindal refused requests from the Fiscal Hawks to meet with them before and during the session and remained opposed to their measures. When he met with reporters Wednesday night, however, he praised their efforts and said he would sign their bills. He said that by working together, the Legislature had produced a budget that would benefit the state’s residents.

Feathers were ruffled nonetheless. Jindal had met with budget negotiators and then 45 minutes later held a press conference without telling the Fiscal Hawks or the Democrats, state Rep. Cameron Henry, R-Metairie, said. On Thursday, members of both parties said the governor was taking credit for helping fashion a budget even though, by their account, he barely played a role.

“This was almost 100 percent a legislative compromise,” said state Sen. Norby Chabert, R-Houma, who was in on virtually all of the final budget negotiations.

The issue that galvanized the Fiscal Hawks was the amount of one-time money that Jindal each year has put in his proposed state budget to pay for recurring — not one-time — expenses. Joined this year by the Democrats, the Fiscal Hawks believe that reliance on one-time money produces budgets that are fundamentally out of balance. That leads to the mid-year budget cuts that have wrought havoc on the state’s colleges and universities and the state hospital system that serves the working poor. Jindal aides counter that state officials have overestimated expected tax collections.

In 2008, Jindal’s budget used $1.3 billion in one-time money for recurring expenses, according to the House staff.

Jindal proposed balancing the budget with $525 million in one-time money for the upcoming fiscal year that begins on July 1. The Fiscal Hawks and Democrats ran over Jindal’s chief budget ally in the House, state Rep. Jim Fannin, D-Jonesboro, and took the $525 million to zero by matching all of the one-time money with one-time expenses.

The Senate, as it had done last year, added back one-time money. The House rejected the Senate’s budget on Tuesday, forcing the two chambers into a conference to thrash out a final version of the budget.

For days, according to the Fiscal Hawks and the Democrats, Jindal and Alario had been trying to pry the two groups apart. The biggest sweetener came when the Senate approved its budget Saturday. It contained a one-time $50 million bonus payment for teachers, a group of generally fervent Democrats that Jindal has actively disdained as governor.

“It was an attempt to break us apart,” state Rep. John Bel Edwards of Amite, the House Democratic leader, said Thursday. “We never came close to breaking apart.”

The budget approved Thursday includes only $80 million in one-time spending, a clear victory for the Fiscal Hawks and Democrats. It also includes a $69 million boost for public schools, the first in the past four years, instead of the proposed $50 million.

At the same time, the Senate and Jindal agreed to three Fiscal Hawk measures that will take effect in the next budget cycle.

  • House Bill 437, by state Rep. Lance Harris, R-Alexandria, would not allow the Legislature to spend money on recurring expenses unless the Revenue Estimating Conference, which meets several times a year to certify the state’s available revenues, rules that the money is indeed a recurring source of income. “This limits the accounting gimmicks,” said Harris, who is also House leader of the Republican delegation.
  • House Bill 620 by state Rep. Brett Geymann, R-Lake Charles, would divide the budget into “discretionary” and “non-discretionary” categories in an attempt to force the Legislature to spend money on what matters most. “This will help us prioritize spending,” said Geymann, who is the Fiscal Hawks’ leader.
  • House Concurrent Resolution 6 by state Rep. Jim Morris, R-Oil City, would reduce Louisiana’s spending limit for state general operating funds from $15.6 billion to $12.9 billion next year. Geymann said the state is currently spending about $10.5 billion in state general operating funds so he believes the new law will prevent a big increase in future years.

The Fiscal Hawks suffered one major defeat during the session when they proposed to raise $329 million by trimming business tax credits. Working separately, Jindal and the state’s most powerful business lobby, the Louisiana Association of Business and Industry, forced them to retreat.

Bernie Pinsonat, a political consultant for state legislators in both parties, predicted that the Fiscal Hawks would face attack ads in their next campaigns accusing them of trying to raise taxes.

“I’ll be the first one who says, ‘I told you so,’” Pinsonant said.

The Fiscal Hawks also failed to prevent Jindal and Alario from plugging a health care budget gap with $87 million in surplus money that the Legislature had promised last year to put into the state’s rainy day fund.

But the Fiscal Hawks could be facing problems of their own making.

They balanced the budget for the upcoming year by creating a tax amnesty program, House Bill 456, by state Rep. Joel Robideaux, R-Lafayette. Jim Richardson, the LSU economist who sits on the four-member Revenue Estimating Conference, said in a recent interview that the revenue from the amnesty would count as non-recurring because it would be a one-time program. That means the Legislature would be balancing its budget by using one-time money, precisely what the Fiscal Hawks say they oppose.

And having private firms run the state’s hospitals – a sweeping move by Jindal that most of the Fiscal Hawks have supported – appears to be more expensive than the Legislature has budgeted for.

The tax amnesty plan and not budgeting enough for the privatization “guarantee mid-year budget cuts,” said C.B. Forgotston, a prominent blogger and attorney who has informally advised the Fiscal Hawks.

Still, the Fiscal Hawks were feeling good Thursday.

“This year has been a giant step forward,” Geymann said, as he looked out on the House in the waning hours of this year’s session. “While we didn’t get everything we wanted, it positions us to accomplish the rest of our goals in the next year or two.”

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  • jeffsadow

    Perhaps Richardson is changing his mind about classification of amnesty funds? In the last one (2009), and the rest of the REC declared about half of it, not all of it, as nonrecurring. Unless he is changing his mind and the remainder of members go along with him, then the proceeds will be higher for operating use than indicated here. Still, that even any such dollars will be classified as nonrecurring likely throws this budget out of balance as the year goes by, and, of course, the greatest irony is that by definition any amnesty money at all is “one-time” money.