There is a fiscal cliff ahead! The total budget shortfall is expected to be between $650 and $950 million. Additionally, not renewing JBE’s erroneous tax hike will equate to about $450 million in revenue that stays in our pockets instead of going to the state. You know the drill. Let’s raise taxes, y’all! But Citizens for a New Louisiana has another solution: Let’s cut spending, y’all! It just so happens that we have identified over $306 million in appropriations from last year that we should examine closely in upcoming years. And this is just in the pork department!
Would it surprise you that the Louisiana legislature gave away nearly $216 million to a mix of private and public organizations last year, which must have been spent and accounted for before June 30, 2024? Not surprising. Did you know that 66.3% of the organizations receiving a handout from our state government have failed to file any cost report and documentation indicating how or if the funds were spent? That means over $134 million remains unaccounted for as of the June 30, 2024, deadline.
Understanding the Process
The state budget is determined by the legislature. They control the purse strings. Much like the local Councils control the political subdivision’s budget, not the chief executive (Mayor, President, etc.) The state budget is established through a series of instruments. The two main instruments are HB1 and HB2. HB1 provides for the “ordinary expenses of the executive branch of state government, pensions, public schools, public roads, public charities, and state institutions.” On the other hand, HB2 provides for “capital outlay budget and the capital outlay program for state government, state institutions, and other public entities.” These are the two main finance instruments to keep your eyes on at the state level.
Supplemental appropriation bills generally follow. These bills sometimes increase and sometimes decrease the amount of money appropriated to the state government for spending during the fiscal year. It depends on the situation, but it’s worth examining further to get a complete picture. For this exercise, let’s look back to the 2023 regular session.
Timeliness is important
2023 was the historic year when the members of the Louisiana legislature voted to “bust the spending cap.” The 2023 Regular Session convened on April 10, 2023, and adjourned on June 8, 2023. So, the session lasted approximately nine weeks. Remember, our legislature is essentially composed of part-time public officials. They are not as engaged day-to-day in state government affairs as our state-wide elected officials or bureaucrats.
During this session, HB1 was pre-filed on March 24, 2023, roughly two weeks before the session began. It proceeded to the House Committee on Appropriations on the first day of the session (April 10, 2023). Then, it was adopted just a few weeks later, on May 1, 2023, and was approved by the House of Representatives on May 4, 2023. The next stop was the Senate.
HB1 was introduced to the Senate on May 8, 2023, and referred to the Senate Committee on Finance the next day. Here, it languished for almost an entire month. In the Senate Committee, it was amended before being sent to the Senate floor, where it was voted on June 6, 2023.
At this point, it is essential to note that the Regular Session is scheduled to adjourn in just two days. This created a very precarious situation for the members of the House. They had less than twenty-four hours to vet the Senate amendments and adopt the instrument. If any additional changes were made to the instrument, it would proceed back to the Senate for concurrence, creating an unnecessary and unwise race against the clock.
What about HB2?
During this session, HB2 was introduced on April 19, 2023, roughly a week after the session began. The next day, it proceeded to the House Committee on Ways and Means before being reported with amendments. Then, it was referred to the House Committee on Appropriations on May 11, 2023. The bill was again reported with more amendments on May 15, 2023. It passed by the House floor on May 18, 2023. Now, it is going to the Senate.
HB2 was received by the Senate on May 18, 2023, and referred by the Committee on Revenue and Fiscal Affairs. A week later, it was recalled from the Committee, only to be referred back to the Committee on Revenue and Fiscal Affairs. On June 1, 2023, it was reported with amendments and passed on the Senate floor after being amended again.
At this point, the rat race was on. June 1, 2023, was a Thursday, and the session would end the following week on Thursday, June 8, 2023. The bill headed back to the House Floor, where it was passed on June 7, 2023, but only after the Senate amendments were rejected. Is all of this necessary?
It’s all by design!
The bi-cameral legislative body, crafted initially to balance the representation of the states and the people of the individual states, is by design. That is the legislative model our state has adopted, borrowing it from the federal constitution, except that both chambers are elected directly by the people. So, what is the purpose of a bi-cameral legislation where both chambers represent the same people? Good question! Don’t expect a good answer anytime soon. One advantage is that it slows down the legislative process. One disadvantage is that it slows down the legislative process. It just depends on the motive.
Some would argue that the delays, specifically in processing appropriation bills in the Senate, are intentional and by design. It is a simple tactic deployed to allow for unnecessary and wasteful spending to be introduced without any real opportunity for it to be vetted by the other chamber. That is what we discovered last year locally when a $3 million appropriation made it into a bill without ever being requested by the agency. It had all the traits of a back door deal designed to enrich a few, with local politicians signing on with letters in support.
Just the tip of the pork barrel iceberg
Remember, we are only addressing HB1 and HB2 here. What about HB560? That was a supplemental appropriations bill that was referenced earlier. That bill was pre-filed ahead of the session on March 31, 2023. Like HB1, it proceeded to the House Committee on Appropriations on the first day of the session, was adopted on May 1, 2024, and was approved by the House of Representatives on May 4, 2024, before heading to the Senate. It was introduced in that chamber on May 8, 2023, and didn’t re-emerge for a vote on the Senate floor until June 5, 2023, with only three days remaining in session. I think you get the point.
The Golden Graton
Plenty of pork is nestled in the hundreds of pages and tens of millions of dollars in appropriations. And plenty of that pork is unaccounted for. Remember, 66.3% of the 587 organizations that received $215.7 million in handouts have failed to file any cost report and documentation indicating how or if the funds were spent. Examples include:
- $15,000,000 to the Louisiana Cancer Research Center
- Another $9,230,724 to the Louisiana Cancer Research Center
- $3,000,000 to the Oschner Clinic Foundation
- $3,000,000 to the Central School System
- Another $2,720,00 to the Louisiana Cancer Research Center
- $2,160,000 to the Jefferson Parish (Parkways Dept.)
- $2,000,000 to the Bayou Community Academy, Inc.
The list goes on and on. It’s not limited to fiscal appropriations made for the 2023 – 2024 budget but extends into previous years.
Previous years
At least 163 (or 60.1%) 271 organizations that received over $81.3 million in handouts from our state government between 2020 and 2022 have also failed to file any cost report and documentation indicating how or if the funds were spent. Another handful of examples are:
- $3,000,000 to Ecole Pointe‐au‐Chien Elementary School
- $2,500,000 to Feeding Louisiana
- $1,500,000 to Louisiana Leadership Institute (reportedly associated with Senator Cleo Fields)
- $1,100,000 to Central Athletic Foundation
- $1,100,000 to the City of New Orleans
It continues even further. Another 10 (or 47.6%) of 21 organizations that received another $9.3 million in handouts from our state government between 2020 and 2022 failed to file any cost report and documentation indicating how or if the funds were spent. All 21 organizations have expired Cooperative Endeavor Agreements and are required to pay the money back to the state. This grouping includes:
- $100,000 to Beautification Project for New Orleans Neighborhood Fund
- $70,000 to the Village of Ida Harvest Festival
- $27,849 to Rho Omega and Friends
We must stop this insanity!
What does it all mean?
When our legislature “bust the cap” and went on a spending spree in 2023 that included handing out $217,717.635, most of which has never been accounted for. Executive Order Number 2016-38 by John Bel Edwards addressed the line-item appropriations in HB1. There appears to have been a concern by the Governor that the funds would not be used “to accomplish the anticipated public purposes” or that they would constitute “constitutionally prohibited donations.” Edwards required a cooperative endeavor agreement or contract to govern the use of the funds and quarterly monitoring of the funds.
John Bel Edwards went on to state: “If the transferring agency determines that the recipient failed to use the Line Item Appropriation within the estimated duration of the project or failed to reasonably achieve its specific goals and objectives, without sufficient justification, the agency may demand that any unexpended funds be returned to the state treasury unless approval to retain funds is obtained from the Division of Administration and the Joint Legislative Committee on the Budget.”
Edwards also addressed Cooperative Endeavor Agreements in a separate executive order, 2016-36. In that order, Edwards indicates “…a non-governmental entity… which defaults on the agreement, breaches the terms of the agreement, ceases to do business, or ceases to do business in Louisiana, SHALL be required to repay the State…” It looks like it is time for our state to go out and collect all of these unaccounted-for handouts. In doing so, they should be able to knock down the fiscal cliff significantly. Who knows? With some improved budgetary management, perhaps we can avoid being pushed off the fiscal cliff by the tax collector.
What fiscal cliff?
It’s a new era in Louisiana. The days of John Bel Edwards’ fiscal cliffs and dirty tricks should be behind us. However, legacy media is already claiming that the state budget will be significantly impacted if the .45¢ tax is not extended again. We have a strong governor and leadership in both chambers of the legislature. It’s unlikely that anyone will be talking about raising taxes (because that’s precisely what extending a “temporary” tax would do).
However, now you know what many had been hiding from you in the past. That is, Louisiana has been over-collecting taxes for decades. Instead of doing the right thing and returning the money to the taxpayer (by not taking it out of the economy), they’ve been spreading it to the well-connected. That’s not what we expect from our government. Empowered with this knowledge, you can now speak with your elected representatives from a position of strength.
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