Wednesday, May 29, 2024

Louisiana House considers Senate proposal to increase spending cap

by BIZ Magazine

By Victor Skinner | The Center Square contributor

The House Appropriations Committee on Friday considered a Senate resolution to increase the state’s spending cap as the Senate works to finalize a budget.

Senate Concurrent Resolution 3 seeks to increase the expenditure cap enshrined in the Louisiana constitution to spend about $1.9 billion in excess and surplus funds in the next budget, which the upper chamber aims to devote to one-time expenses including teacher raises and infrastructure projects.

The proposal is at odds with a House budget approved in early May that devoted about $950 million of the additional funds to pay down unfunded accrued pension liabilities, expenses that don’t apply to the cap House Republicans argued would result in more than $200 million in interest saving schools could use to increase pay.

Senate President Page Cortez, R-Lafayette told the House Appropriations Committee the House budget remains about $200 million above the spending cap, and if approved, would force Gov. John Bel Edwards to cut spending from the plan to comply with the constitution.

SCR 3 aims to increase the cap by about $500 million next year, and by roughly $1.8 billion the year after, to ensure the state can spend the additional funds on one-time expenses, which Cortez stressed “will not increase future obligations.”

A vote to increase the spending cap requires two-thirds of lawmakers in both chambers to agree, and House Republicans have said they will not vote on SCR3 until they review the Senate approved budget, which is expected on Monday.

The situation comes as the State Board of Elementary and Secondary Education is requesting a $282 million increase in the school funding formula, which includes $197 million in raises of $2,000 for teachers and $1,000 for support staff and stipends for teachers in certain schools and leadership roles.

The Senate Education Committee initially rejected the proposal, which can only be altered by BESE, but it later cleared the upper chamber after the board refused to amend it. That proposal is now pending in the House.

Cortez acknowledged on Friday the state could fund the BESE increase along with supplemental pay for law enforcement officers, both recurring expenses, without busting the budget cap through cuts to other areas.

Numerous employee associations have lined up in support of SCR3, while business leaders oppose increasing the budget cap.

Daniel Erspamer, CEO of the Pelican Institute, noted in Friday’s committee hearing that paying down debt would help stabilize the budget while moving the state closer to promised tax cuts that would benefit all businesses and taxpayers in the state.

He also pointed to current reserves that equate to roughly 92 days of operations, compared to neighboring states with over 100 days.

The Pelican Institute is among a coalition of Louisiana organizations that also include the Louisiana Association of Business and Industry, Americans for Prosperity Louisiana, the Louisiana Family Forum and several others that have outlined key principles for a responsible budget that would set the state up “to make a real difference for the future of Louisiana.”

The coalition calls on lawmakers to avoid exceeding the spending limit and to fully fund the rainy day fund to save toward revenue triggers to lower taxes.

The coalition has also called on the legislature to limit one-time spending to “genuinely shovel-ready transportation and infrastructure projects,” noting the backlog in construction and workforce shortages in the industry.

“Our feeling is the budget cap is there for a reason … and the government should live within its means,” LABI President Jim Patterson told the House Appropriations Committee.

Lawmakers have until Thursday to finalize a budget or face the prospect of an extraordinary session to get a plan in place before the fiscal year begins on July 1. In an extraordinary session, three-quarters of lawmakers must vote to approve the budget, which further complicates the dynamics.

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