New budget battle looms as House speaker blocks better revenue forecast

House speaker blocks revenue forecast as battle over budget looms

BATON ROUGE, LA (WAFB) - A new battle over Louisiana’s budget is brewing after the Revenue Estimating Conference (REC) did not recognize a revenue surplus projected by the state’s top economists Monday.

It’s the second time the REC has been unable to agree on a surplus figure since the last adopted projection in June. The REC will not meet again before the end of the year, meaning the surplus cannot be used to restore some cuts lawmakers made to state agencies during the last special legislative session until a supplemental budget is filed next year.

Senate President John Alario, R-Westwego, says the Senate agreed to make $43 million in cuts with the understanding that any surplus money would be added back into the budget to fund things like pay raises for corrections officers and investment in local jails.

“I can’t say I’m totally surprised, but I’m disappointed,” said Commissioner of Administration Jay Dardenne. “I thought we could put this behind us. We would be in a position where we’d agreed on the budget, we’d stabilized the budget, and we had good news now."

“We ought to be glad at Christmas season that we’re finally getting some good news,” Dardenne continued. "This puts a damper on it.”

The economists are projecting a surplus of around $130 million this year, and more money next year, thanks to better than expected income and severance tax collections. The REC must be unanimous when it adopts a revenue estimate.

During November’s meeting, Rep. Cameron Henry, R-Metairie, expressed some concern that dropping oil prices were not factored into the economists' equations before he voted against the recommendation in place of House Speaker Rep. Taylor Barras, R-New Iberia.

On Monday, the economists offered more conservative estimates that did not satisfy Barras, who says he wants the state to wait until the spring to adopt a new forecast. “The more information we have, the better we are at the forecasts,” he said. “We’ve been criticized for fiscal cliffs and getting the REC estimates incorrect, and this is why. With four months of information, we’re trying to make a $200 million change to the forecast.”

The REC frequently adopts new forecasts, and Barras acknowledged in the meeting there will probably be some surplus amount. It’s rare for the state to enter a new calendar year with outdated numbers.

“Politics,” Dardenne said. “That’s what’s driving these decisions. The conference has always acted in December based upon information that’s forthcoming since July. There’s no reason not to do that this year.”

Gov. John Bel Edwards proposed to use some projected surplus in 2019’s budget to fund teacher pay raises. Because the REC will not meet again before the governor’s office begins most of its work on the budget, it’s possible the first iteration of the executive proposal will not include those pay raises.

“In all fairness to our teachers, we need to make sure that revenue is reliable and certainly recurring,” Barras said, expressing his support for the concept of teacher pay raises, but questioning the timing. “I just don’t believe we’re at that point."

Barras argued “nothing would be affected” by waiting until later in the year to recognize new revenue.

LSU economist, Jim Richardson, Dardenne, and Alario all voted in favor of the economists' projections.

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