With new money washing up on the shores of State Capitol Lake, it's time to party again like it's 2008?
We're afraid that is going to happen, even when there are already warning signs that the boom of 2022 is not a permanent state of affairs. As it wasn't in 2008, when within a year big tax cuts and a national recession collapsed state revenues, with ruinous long-term effects on state government and citizens.
Louisiana is part of the national economy, much more so now that oil and gas revenues no longer fuel the state budget like they used to. And with interest rates rising to combat inflation and stock markets tanking around the world, Louisiana is not immune to the deflating of a post-pandemic boom.
Nor does the generous funding right now take into account what the economists delicately call "geopolitical risks," which include a very real war in Europe.
So while the legislators pop the Champagne corks, we look at the telltale $45 million, with a minus sign in front of it.
That's the small drop in some state taxes and fees for the general fund, forecast by economists, even as they and state officials "recognized" new revenues that are overall higher.
With various deductions and dedications, the fiscal year beginning July 1 will see another $350 million in the state general fund available for spending. But then, there's the cautionary predicted decline -- yes, decline -- in taxes and fees over the next year.
It's just a projection, close enough for government work and not a huge problem with about $11 billion in the general fund.
But the budget-builders understand, or ought to, that large chunks of that total are spoken for already. The general fund is the operating engine of state government, paying for health care and education and other essentials; it's by far the more important source of dollars than the federal funding and one-time surpluses coming into state government this year.
Even if we support some of the major goals of the governor and Legislature with the new general fund money, including a more generous pay raise for teachers, we urge restraint.
One of the mistakes of 2008 was the fad of tax cuts, eroding the general fund just in time for fiscal disaster to ensue. This year, there are efforts to dial back a sales tax increase of several years ago, which has helped to make the general fund healthier during this boom.
We don't like sales taxes in general, but it is irresponsible to reduce general fund revenues without a realistic plan to replace them. Saying we'll ratchet down the budget when the time comes is foolish, just as it was in 2008.
We deplore the cavalier attitude of one of the key authors of tax-cut legislation, Tony Bacala, R-Prairieville, who declined to identify to the full House what could be cut. He's not only a veteran on the budget-writing Appropriations Committee, he was an Ascension Parish chief deputy, so he knows how difficult it is to cut budgets -- meaning, usually, payrolls -- at any level of government.
And Bacala knows that colleges and health care take the brunt of cuts, as so much of the general fund is dedicated and can't easily be cut. That happened before.
When senior members offer tax-cut bills without a coherent plan on how to pay for them, new members go along because they don't know any better. But we think we see the mistakes of 2008 again.
Beware that minus-sign in the revenue forecast. It is a yellow flashing light.
-- The Advocate, May 15