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The other state budget going bust 

Jeremy Alford on why the construction budget’s red ink is so dicey for Louisiana lawmakers

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You've no doubt heard the dire news about Louisiana's 2015-2016 operating budget and the $1.6 billion shortfall that's tearing it asunder. What you may not know is that the state's other big budget — the one for construction projects — also needs to be tamed sooner rather than later.

  It's formally known as the Capital Outlay Bill, and more informally as the construction budget. I like to think of it as a fiscal pinata that gets hauled out every year and stuffed tight.

  University dorms, hospital elevators and flood walls are packed in there alongside less urgent needs like a new headquarters for a local Junior League, a community center for a lawmaker's high school alumni group and grounds improvements for a parish fair (actual projects from the 2014 bill).

  The budget pinata is cracked open each year by the governor. Like his predecessors, Gov. Bobby Jindal gets to decide which lawmakers get their goodies from the papier-mache pelican. The governor's stick comes in the form of an agenda that he presents to the Louisiana Bond Commission for approval. Lawmakers generally approve far more construction projects than the state can afford, and because money for most construction projects comes from the sale of bonds, making the governor's list of projects submitted for approval is crucial.

  That gives the governor an awesome bargaining chip during legislative sessions. It's the worst-kept secret in Louisiana politics, in fact. If a lawmaker wants construction cash for his or her local church (yes, that can be found in the 2014 Capital Outlay Bill, too), then that lawmaker may be asked to vote with the administration on key measures. Horse-trading is legislative currency.

  It's not unusual for the Capital Outlay Bill to be overcommitted by hundreds of millions of dollars. Sometimes it seems as though everyone gets to stick something in, even if it has little chance of being funded. So what's the solution?

  House Ways and Means Committee Chairman Joel Robideaux, R-Lafayette, who oversees the committee where the construction bill begins its annual journey, has suggested blocking all new projects this year. That would save the state some $60 million during the next fiscal year on debt service. He's also thinking about limiting funding to only the most vital of ongoing projects — all in the name of helping rein in the state's projected $1.6 billion operating budget deficit.

  With lawmakers in need of re-election fuel and the administration in need of leverage, Robideaux's plan will be a tough sell. No doubt the candidates for governor are paying attention. All four of the announced contenders already have promised to call a special session to rehab the operating budget, as well they should. But why stop there?

  Lt. Gov. Jay Dardenne said lawmakers could start by honestly prioritizing projects, but as a former legislator, he knows how difficult that would be. "It's a system that cries out for reform," he said.

  Projects are categorized in the Capital Outlay Bill by priority — from Priority 1 through Priority 5 — but the categories don't necessarily reflect "importance." New projects are in Priority 2; ongoing projects are in Priority 1; future projects fall into Priority 5, which essentially is a waiting list; and Priorities 3 and 4 more or less mean nothing.

  "It's confusing by design," said Public Service Commissioner Scott Angelle, who formerly was Jindal's legislative liaison. "Even at the senior staff level of state government, folks don't understand it."

  U.S. Sen. David Vitter has voiced frustration with the current system as well and has said he'd be willing to take a hard look at it if elected governor. As Vitter is the perceived frontrunner in the gubernatorial race, lawmakers may want to hear more from him on the subject, especially with Robideaux taking a strong stance on slowing down the capital outlay train before a new governor is elected.

  State Rep. John Bel Edwards, D-Amite, has long been critical of the system — and Jindal's overall budgeting philosophy, which offers him a unique perspective on the horse-trading side. "I'm a little offended by that because my particular relationship with the governor has never allowed me to get a project for a vote," Edwards, who also is a declared candidate for governor, said with a laugh.

  Given Jindal's national ambitions, he should be eager for reform. When he first took office in 2008, he moaned about the $1.4 billion in Priority 5 obligations he inherited from former Gov. Kathleen Blanco. Right now there's $1.6 billion in Priority 5 obligations, and soon it could grow by more than $200 million.

  The complexity of Louisiana's capital outlay budget is as absurd as it is necessary. That's one of many reasons why substantive reforms have eluded lawmakers. A cynic might suggest that governors and lawmakers like things as they are. Truth is, most legislators sound eager for change — but they're caught between a lack of political will and longstanding resistance to learning new ways of cracking open the pinata.

  Chances are change will come only if those who hold the stick want things to change. Considering the enormous political leverage the present system gives Louisiana governors, the odds strongly favor the status quo.

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