With budgets being a hot topic as the legislative session closed and fiscal years approaching an end, there’s been a lot of talk about cuts and tighter purse strings.
Why is that? The state just passed a $25 billion budget, and municipalities like Minden are looking a passing a budget in the millions.
State Rep. Gene Reynolds and Minden Mayor Tommy Davis say these cuts and tighter purse strings come from the fact that much of the money brought in is dedicated money – which means the money cannot be spent for any other purpose than for what it was intended.
“We get two percent sales tax,” Davis said. “Half of that, one percent, is dedicated to the sewer plant and to the recreation center. So, out of an
estimated $5.8 million sales tax, half of that is dedicated and can only be spent on those two items.”
Davis says every budget has to balance.
“Your income and your expenses – you cannot spend more than you take in,” he said. “We estimate our income, and we estimate our expenses and they have to be the same.”
Typically, he says when they estimate income for the next fiscal year, they do so on the conservative side, but they tend to be a little more liberal with estimating expenses.
“We know what our expenses are going to be, but there are so many expenses that we don’t know,” he said. “(We) don’t know when we’re going to have a water leak. We had two water mains break on Homer Road since Memorial Day – one on Memorial Day weekend. We just can’t anticipate, but we still try to put money in there for that.”
He goes on to say the biggest nonrevenue expense is the police and fire departments. While they do have taxes that support public safety, there is no income generated from them. Next to that is the expense of supporting employees. Davis says one third of their budget goes to employees to pay their salaries, benefits and retirement.
Statewide, it’s not much different than a municipality in that the state has income that is dedicated; however, much of the state’s budget is constitutionally dedicated, which means it cannot be touched. Reynolds says there’s very little money that can be moved around to plug holes in the budget if need be.
This year instead of cutting just higher education and healthcare as has been done in the past, across the board cuts were made to help balance the budget. Since so much of Louisiana’s income is dedicated funds – it cannot be spent on anything else other than for what it was intended – higher education and healthcare have always been the two funds slashed the hardest, he says.
“About 46 percent of our budget is federal money, and that’s dedicated,” Reynolds said. “About $7 billion to $9 billion of that was tax rebates that we’ve given companies for a long, long, long time. So about $3 billion of that was general fund. The rest of that is dedicated to something constitutionally. In a nut shell, that’s the issue.”
He says so much of the state’s money is dedicated and makes the budget nearly impossible to deal with, because there’s not much wiggle room.
“This goes back for many years,” he said. “We had a constitutional convention in 1973, and every governor and legislator that’s come by has dedicated funds. Every October, there’s some constitutional amendment that dedicates funds. This is not one person or one governor’s fault. This is something that’s been going on for a long time.
“If you dedicate all your money and give away the kind of money we’ve been giving away in tax credits, something’s got to give, and the only thing that’s not dedicated is higher ed and health and hospitals,” he continued. “That’s why they get clobbered year in and year out.”
He hopes in January, when a new governor is seated, to begin discussion on changing the structure of the budget with the hope of finding some wiggle room to stop bleeding higher education and healthcare.