Rainy Day Fund is major sticking point in special session

Balance of Rainy Day Fund (Source: WAFB)
Balance of Rainy Day Fund (Source: WAFB)

BATON ROUGE, LA (WAFB) - Lawmakers appear to be putting together the preliminary pieces of a deal to fix the state's $304 million shortfall with just two days left in the special session.

One of the biggest sticking points of the session has been whether or not to use the so-called "Rainy Day Fund." This bucks the trends of the past, where the state's savings account was typically not treated as a political football.

"It's one of those tug of war games, where one side sees it one way, the other side sees it the other," said Rep. Clay Schexnayer, R-Gonzales.

The "Budget Stabilization Fund" was set up in the early 1990s, fueled in part by excess oil revenues. "Just like any prudent family would have a savings account, so when the lean times come, you would have something to fall back on," said Rep. Rob Shadoin, R-Ruston. Shadoin supports drawing on the Rainy Day dollars to help fill in part of the budget hole and protect things like higher education from cuts.

The size of the Rainy Day pot peaked at the start of fiscal year 2009 - 2010, with more than $800 million. It has since been on the decline, currently resting at just below $360 million. Lawmakers tapped into it four times during the Jindal administration. Last year, lawmakers used $128 million to help deal with the multi-billion dollar budget deficit.

As part of his plan to address the budget deficit, Governor John Bel Edwards wants to use about $119 million from the Rainy Day Fund, the maximum amount allowed under statute. At any given time, lawmakers can only withdraw one-third of the account. In recent history, lawmakers have gone along with these requests with limited interference. During last year's first special session, the same group of legislators voted unanimously to draw on Rainy Day Funds to deal with the shortfall.

This time is different.

"This is a power play between part of the Republican leadership of the House and the [Edwards] administration," Shadoin said.

Lawmakers are split. Many Republicans prefer to cut rather than to draw on the savings account. They say they want to both rein in the size of government and make sure they have as much savings leftover as possible for potentially bigger problems down the road.

"We have a very deep fiscal cliff coming June 30, 2018. We have no solution, so in light of that, it makes it more difficult to dip into the last little bit of savings that remains," said Rep. Barry Ivey, R-Central. At the start of fiscal year 2018 - 2019, many of the taxes passed during last year's special sessions expire, creating yet another shortfall.

Most Democrats want to use as much Rainy Day funding as possible to prevent cuts to programs, with the promise of doing budget reform in this year's regular session. "Let's not punish people for the next four months to demonstrate that you want to make additional cuts next year. Let's just do that in April," said Rep. Walt Leger, D-New Orleans.

On Sunday, lawmakers in the Senate advanced a plan to draw on about $99 million from the Rainy Day Fund. Meanwhile, a recent House plan only relies on about $75 million in state savings. However, the House has not yet voted to unlock those dollars, which requires a two-thirds vote.

Lawmakers have until Wednesday at midnight to come to a deal.

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