Most of us at one point or another have found ourselves in the proverbial “Catch 22” situation when we feel damned if we do and damned if we don’t.
The term “Catch 22” probably runs through the mind of Gov. John Bel Edwards quite often these days. The state faced a $304 million budget shortfall for the current fiscal year, and once again questions arose as to which direction he should take to cease the monetary hemorrhage.
Gov. Edwards knew a tax hike would not stand a chance, particularly one year after he imposed the one-cent sales tax and imposed taxation on everything from online sales (actually a very wise move) down to items such as Girl Scout Cookies. He did not want to make additional cuts, particularly to higher education, which has endured the brunt of the budget axe on an annual basis since Gov. Bobby Jindal’s first term in office.
The elimination of those two options has left him one last choice: Dig into the piggybank.
The proverbial “piggybank” comes in the form of the Budget Stabilization Fund, also known as “The Rainy Day Fund.”
Lawmakers created the Budget Stabilization Fund in 1990 to provide a savings account to protect the budget against revenue declines, particularly those which arise mid-year and especially when it involves revenue declines. It doesn’t take a Rhodes Scholar to figure that lawmakers saw the need for a savings account to prevent a repeat of 1986, when a plummet in oil prices to $10 per barrel led the state into a budgetary depression which lingered into the 1990s.
The Jindal administration pulled from the Rainy Day Fund several times in the second term, particularly when oil prices dropped below $20 his final year in office.
The oil prices have increased far more slowly than they plummeted.
The price of oil hovers around $53 per barrel today. It’s much better than the $26 price a year ago, but a far cry from the 2013 price of $110 per barrel.
Edwards took the Rainy Day route when he called his third special session in two years. At an instant, he certainly knew he was ripe for criticism.
He opened himself to barbs from a block of Republicans who preferred cuts. Several GOP lawmakers, including Rep. Valarie Hodges of Denham Springs, aptly stated that Edwards often criticized Jindal for use of the Rainy Day Fund.
Edwards may have taken a page from Jindal, the predecessor he has sharply criticized, but he had little or no choice in the matter. The same year JBE imposed cuts on education and healthcare, he also led the state through a year rife with natural disaster.
The August floods cost the state more than $246 million in unbudgeted expenses, which added to the burdens on state cash flow problems.
It makes sense to use the Rainy Day Fund in the aftermath of a year in which 57 of 65 parishes received a federal disaster declaration. The $246 million costs -- all unreimbursed – played a massive role in the budget shortfall which grips the state.
Ironically, a rain event has played a huge role in the use of the Rainy Day Fund.
Whether or not a majority of lawmakers agree it’s a valid reason is another story.
Whether the lawmakers opt for cuts or the Rainy Day Fund, it leaves the governor holidng a double-edged sword.
Ten days is not a long time for a session, but the repercussions from decisions legislators make during that time frame could either prevent the sting of further budget cuts or lead to much stormier days ahead.