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Bill seeks to make state spending cap more restrictive

February 20, 2018
By Natalie Anderson
Originally Posted on The Daily Advertiser

A proposal to seek a constitutional amendment to make the state spending cap more restrictive by changing the way it is calculated was approved Tuesday by the House Appropriations Committee.

The bill will move to the House floor and will require a two-thirds vote in both chambers before being presented to voters.

House Speaker Taylor Barras, R-New Iberia, said the proposal is part of the spending controls that Republicans want to see before agreeing to any compromise with Gov. John Bel Edwards to raise revenue to help avoid a nearly $1 billion budget gap.

But Jay Dardenne, the governor’s commissioner of administration, said he was concerned that the bill would require a two-thirds vote in the Legislature to adjust the cap. He said that could interfere with routine mid-year budget adjustments.

House Speaker Pro Tempore Walt Leger, D-New Orleans, shared the same concern, fearing that the requirement of a two-thirds approval is “a mechanism to force supermajority votes on budget items,” making the process of reaching a balanced budget more difficult.

Under current law, the state calculates a spending limit for each fiscal year by applying a growth factor based on the change in the personal income level in the state.

Barras proposed changing the formula with a broader array of figures showing how the state’s economy is doing. The factors include a three-year average of Southern consumer price indexes, a three-year average of the state population change and state revenue growth.

His bill also would cap the growth in spending at 6 percent yearly. Spending growth in Louisiana has not hit the caps in recent years and typically stays below 6 percent, with the exception of the period after hurricanes Katrina and Rita, Barras said.

As a result, Leger said he views Barras’ proposal as more of a spending limitation measure than a cost-saving one.

Leger said he was willing to work with Barras to support the amendment, but he is concerned with placing a limit that does not recognize that expenditures and debt obligations increase each year.

He said the higher unemployment rates from 2014 to 2016 provide an example of times when the state government would need to increase expenditures and assist those in need of state services.

He said he wants reassurance that the factors involved in the calculation are sufficient to ensure minimal growth in the spending limit year-to-year to meet state needs.

Barras also said that if the state has any surpluses, he would rather stop putting that in the  Budget Stabilization Fund, better known as the “Rainy Day Fund.”

Jan Moller, director of the Louisiana Budget Project, a nonprofit group that advocates for state spending and how it affects Louisiana’s low- to moderate-income families, also opposed the bill. He said he was “not aware of a state with a calculation that is this limiting.”

The Louisiana chapter of the Americans for Prosperity — a national anti-tax group funded by GOP donors — and the Louisiana Association of Business and Industry supported the bill.

Barras and other House leaders say a stricter spending cap needs to be approved before voting on tax measures to close the budget shortfall, which could hit July 1.