Don’t delay the REC, PAR says
The Revenue Estimating Conference’s May revenue estimate is overdue. Annually, the Legislature relies on a May revenue estimate revision to make final adjustments to the state budget for the upcoming fiscal year that begins in July. At least one member has suggested skipping that part of the process this year. To hold off on a new estimate would reinforce the public perception that politics is at play in what should be an unbiased, systematic estimating process.
A revised estimate would complicate budget negotiations. If the revision were to show a revenue decline, a new round of budget cuts would have to be made. In contrast, more money could undermine some of the more tenuous deals that have been struck so far to divvy up the gains among the operating, capital outlay, surplus, federal stimulus, mega-project and other budgets.
The Revenue Estimating Conference (REC) was established in 1987 and given constitutional protection in 1990 by an amendment that enacted several other fiscal reforms, including the expenditure limit, the rainy day fund and balanced budget requirements. It was stablished constitutionally in an effort to ensure its procedures could not be scuttled. The four members of the conference include the governor, the president of the Senate, the speaker of the House (or their designees) and a faculty member of a university or college in Louisiana who has expertise in forecasting revenue. Estimates are established by unanimous vote from between two estimates presented by state economists – one from the Legislature and one from the administration.
The REC consistently meets four times each year in February, May, September and December. Regardless of whether the economists’ projections show change from the existing estimate, the meetings are held and revised estimates are adopted. The speaker of the House was recently quoted as saying he thought no meeting was necessary this May, because the new estimate would likely be too close to the existing estimate to matter.
Having the REC regularly develop and revise objective projections for the amount of money the state will be able to spend each year is the foundation of a fiscally responsible budget process. Failure to timely recognize shortfalls or deficits no matter how small threatens the state’s fiscal stability. On the other hand, failure to timely recognize new revenue is a maneuver designed to shift blame and obscure motivation for pending cuts. In either case, short-circuiting the process is a dishonest approach to governing.
The revenue estimate should not be delayed further. To politicize the process now would erode public confidence and support the perception that politics has been allowed to corrupt the process. Louisiana should not take this step back toward the days of unbalanced budgets that relied on contingent funds and often resulted in year-end deficits.