Blanco spending plan is stymied
Wednesday, December 06, 2006
By Jan Moller

BATON ROUGE -- A booming post-hurricane economy has produced soaring tax collections that will add almost $1.6 billion to the state's coffers this year, a forecasting panel said Tuesday, giving lawmakers a broad menu of spending options as they prepare to meet in a special session Friday.

But how much of that money will be spent during the 10-day pre-holiday session -- or whether the session will even go on as advertised -- remained in doubt as the political feud between Gov. Kathleen Blanco and her handpicked Senate president threatened the governor's spending plan.

Adding to Blanco's woes, several senators said they might not give her the two-thirds vote she needs to raise the state's constitutional cap on spending. Taken together, it means a quick-strike legislative session designed to let legislators play Santa Claus heading into an election year has instead become a critical test of Blanco's political strength.

The Revenue Estimating Conference, which prepares the official budget forecast, recognized the $1.6 billion in extra money for the current budget year, which ends June 30. That's a 22 percent increase in state revenue over the spending plan approved by legislators in June.

But the windfall would have totaled $2.4 billion were it not for Senate President Donald Hines, who sits on the four-member forecasting panel and voted against recognizing an additional $827 million. That's the surplus left over from the 2005-06 budget year, money that Blanco has hoped to use for road construction, hurricane debris removal and debt repayment, among other things.

"I think that it's a great tragedy that Don Hines is preventing the people of Louisiana from getting the benefit of those dollars," Blanco said, adding that she hopes to convene another meeting of the revenue panel before or during the session so the surplus dollars can be recognized.

Sparring over surplus

Hines cited a state law that says prior-year surplus dollars can't be plugged into the budget until the state's Comprehensive Annual Financial Report is published and adopted by a legislative budget panel. That report won't be ready until late December at the earliest, Legislative Auditor Steve Theriot said.

"I'm following the law, and I would hope that she's following the law," Hines said. He said the rules that govern the ways surplus dollars are recognized were developed in 2002 at the urging of Commissioner of Administration Jerry Luke LeBlanc, the governor's chief budget officer, who was chairman of the House Appropriations Committee at the time.

But LeBlanc said the revenue panel has the power to waive the procedural rules and recognize the surplus dollars. Blanco said Hines was merely retaliating for her role in blocking a $135 million sugar syrup mill that Hines had sought for his district. The controversial project was rejected 9-4 last week by the State Bond Commission after Blanco's allies turned against it.

"I think that is his only agenda, and frankly I really tried hard to work with the senator on that particular project," Blanco said.

But Hines, in a news release issued late Tuesday, said his objections were based only on the law. "My position on this matter is not about personalities. It is not about formalities. It is about legalities," Hines said.

Changing fortunes

Regardless of whether the surplus can be spent during the session, Tuesday's revenue numbers represent a remarkable turnaround for a state that cut nearly $1 billion in spending shortly after Hurricanes Katrina and Rita.

Greg Albrecht, chief economist for the Legislative Fiscal Office, described the revised forecast as a "correction" and said he and other economists were far too cautious in estimating the tax revenue that would flow from the increased economic activity that followed the storms.

"I'm running out of reasons to be cautious here," Albrecht said.

The governor called the special session chiefly to spread money among a panoply of projects and initiatives: pay raises for teachers, emergency first-responders and other government workers; insurance rebates to homeowners; tax cuts for businesses and individuals; and new spending on road construction and to pay down debt in the public pension plans.

But legislators have been in various stages of revolt since last week, with some complaining the session doesn't do enough to address long-term insurance issues, while others said Blanco hasn't done enough to consult with the Legislature on her spending plans.

"These discussions should have taken place a month ago," said Sen. Rob Marionneaux Jr., D-Livonia, who said it remains "a very real possibility" that senators will try to adjourn the session right after it begins.

Spending cap looms

Complicating the political equation for Blanco is the constitutional cap on the amount of state tax revenue that can be spent in a given year. Louisiana is only $331 million under the cap, and any spending above that requires the approval of two-thirds of the House and Senate.

At the moment, "It's going to be tough to get a two-thirds vote for anything except maybe to adjourn," Hines said.

Senators in both parties made it apparent Tuesday that Blanco could find it difficult to muster the supermajority in the upper chamber for lifting the spending cap.

On one side are the governor's critics, many of them Republicans, who are adamantly opposed to much of her still undefined spending plan. That camp could be joined by senators who support many of Blanco's stated goals yet remain uncomfortable with committing so much money without more debate.

"I think there's going to be some support for not lifting the cap for now," said Sen. Robert Adley, a Benton Democrat and Blanco ally, "not because (the senators) don't want to spend the money, but because they want to spend it the right way.

"I told the governor and her staff several times that my concern is there has been little input from other people," Adley said. "What you could be facing here is a Legislature that refuses to lift the cap."

Early exit?

Of the senators who said they would consider supporting an immediate adjournment motion, none would commit to proposing one.

Skeptical senators will get their chance this week to publicly scrutinize Blanco's session agenda. The Senate Finance Committee will meet Thursday to question administration officials about the governor's spending plan and its long-term impact on the state budget. All senators will be invited to the meeting.

Sen. Walter Boasso, R-Arabi, who is considering a run for governor next year, said he hopes the Senate will have enough votes to prevent spending above the budget cap and therefore keep the extra expenditures in the session to about $331 million. Failing that, the Senate should adjourn, he said. Boasso wants to use some of the money to create an insurance fund as a hedge against future catastrophes.

Adley also said lawmakers must be aware that eyes outside Louisiana are watching as the state and its residents continue to spend billions of dollars in federal aid.

"My guess is that there's going to be a pretty good fight with the feds and FEMA about how much they're going to expect us to repay them," Adley said.

The escalating dispute between Hines and the administration has also fueled talk that Blanco could maneuver for a new Senate president.

Sen. Heulette "Clo" Fontenot, R-Livingston, said Agriculture Commissioner Bob Odom called him last week to ask whether the administration was feeling out senators about a possible leadership change. Odom, who has a statewide power base, was the lead backer of the Bunkie sugar mill project.

But other senators dismissed that possibility, as did the governor herself.

"I have not had, nor have my people had, a single conversation urging the removal of the president of the Senate," Blanco said. "I would prefer to have a reconciliation and a meeting of the minds."

. . . . . . .

Robert Travis Scott contributed to this report.

Jan Moller can be reached at jmoller@timespicayune.com or (225) 342-5207.

Bill Barrow can be reached at bbarrow@timespicayune.com or (225) 342-5590.

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