This action might not be possible to undo. Are you sure you want to continue?
O Box 94005 Baton Rouge, LA 70804 Request for Advisory Opinion on Legality of State Budget Dear Attorney General Caldwell: State law requires a balanced budget. To that end, both the State Constitution and Revised Statutes prohibit so-called “deficit appropriations”; i.e., budget appropriations that exceed the forecast of available funds. Specifically, La. Const. Art. 7, §10(E) and La. R.S. 39:54(A) mandate that “Appropriations by the legislature from the state general fund and dedicated funds for any fiscal year … shall not exceed the official forecast in effect at the time the appropriations are made.” Per La. Const. Art. 7 §10(B), “The [revenue estimating] conference shall prepare and publish initial and revised estimates of money to be recognized by the state general fund and dedicated funds for the current and next fiscal years which are available for appropriation.” The General Appropriation Bill for Fiscal Year 2012-2013 (HB 1, enacted as Act No. 13 of the 2012 Regular Legislative Session, effective July 1, 2012) includes approximately $8,343,000,000 in appropriations from the state general fund and approximately $3,855,000,000 in appropriations from statutory dedications. However, the official revenue forecast (adopted April 24, 2012) in effect at the time HB 1 was passed reflects only $8,103,000,000 in state general fund revenue. Thus, it would seem that, by appropriating approximately $240 million from the state general fund over and above the official forecast amount, HB 1 directly violates state law. The Governor’s office and the Legislature purported to cover the revenue shortfall in part through the passage of HB 822, the so-called “Funds Bill” (enacted as Act No. 597 of the 2012 Regular Session). HB 1 identifies appropriations in the amount of $237,659,592 and $35,000,000 as supplementary budget recommendations from, respectively, the Louisiana Medical Assistance Trust Fund and the Overcollections Fund, see HB 1, § 18(C), which are explicitly contingent on the passage of HB 822. See HB 1 at pp. 132 & 269.
As an initial matter, to the extent that it includes appropriations contingent on the passage of other bills, HB 1 would seem, on its face, to run afoul of Art. 3, § 16 of the Constitution, which states: “no appropriation shall be made under the heading of contingencies or for longer than one year.” Nonetheless, as previously noted, contingent appropriations can be found on pages 132 and 269 of HB 1. Moreover, consideration of HB 822 shows that, in many instances, funds it purports to make available for appropriation in HB 1 are, at best, highly speculative or, at worst, essentially fictional. For example, HB 822 directs the Treasurer to transfer $35 million into the Overcollections Fund (presumably, the same $35 million contingently appropriated in HB 1 as a supplementary budget recommendation) from the sale or lease of New Orleans Adolescent Hospital. See HB 822, § 7. In fact, no one actually expects the New Orleans Adolescent Hospital to sell or lease for an amount close to $35 million during the 2012-2013 fiscal year. The Funds Bill similarly calls for the transfer of $56 million into the state general fund from “excess property insurance recovery in the Self-Insurance Fund.” HB 822, § 8(B). Like illusory proceeds from the sale or lease of NOAH, there is no basis for expecting this money to actually materialize. It is common knowledge that the property insurance claims forming the basis of this $56 million item arise primarily from losses sustained in 2005 as a result of hurricanes Katrina and Rita. Those claims have been asserted and denied and there is no reason to think they will be paid in fiscal year 2012-2013. Nonetheless, $56 million has been appropriated from the state general fund by HB 1 on the basis of these dubious recoveries. Their predictable failure to materialize will result in a budget deficit and year-end funding cuts; cuts that could have been better planned for and anticipated had the budget been crafted in accordance with the Constitution. The FY 2012-2013 budget violates the Constitution in still another way by making improper use of nonrecurring revenues. The REC is constitutionally required to designate which revenues are nonrecurring. See La. Const. Art. 7, § 10(B); La. R.S. 39:2(27) (defining “nonrecurring revenues” as “revenue received by the state from a source identified by the Revenue Estimating Conference as being of a nonrecurring nature”). Once revenues have been identified as nonrecurring by the REC, La. Const. Art. 7, § 10(D) (2) limits their use to one of only six, specified purposes.1 The unambiguous intent of these provisions is to prevent one-time monies from being used to pay regular, recurring expenses. Nonetheless, the Legislature circumvents this restriction through a series of funds transfers that effectively convert nonrecurring revenues into state general fund revenues, available for general use. This is accomplished by first transferring monies out of a constitutionally-authorized repository for nonrecurring revenues and into the state general fund, then filling that hole (which the Legislature just created) with a second transfer, back into the same fund, of recognized nonrecurring revenues. The net effect is that nonrecurring revenues have been misappropriated for general use, clearly contravening the purpose of La. Const. Art. 7, § D(2). ___________________
1Those purposes are: • The retiring or defeasance of bonds; • Paying down the unfunded accrued liability of public retirement systems; • Funding capital outlay projects; • Deposits into the Budget Stabilization Fund;
• Deposits into the Coastal Protection & Restoration Fund; • New highway construction for which federal matching funds are available.
This practice is reflected in section 8(E) and section 9 of HB 822, which direct the treasurer to move $20,104,310 from the Coastal Protection and Restoration Fund (which is authorized to receive nonrecurring revenues per La. Const. Art. 7, § 10(D)(2)(e)) into the state general fund, then transfer the same amount of “non-recurring revenues … comprised wholly of cash recognized from prior year end surplus” back into the Coastal Protection and Restoration Fund. The impropriety of this revenue shell game and its conflict with the State Constitution are manifest. For these reasons, I ask your office to render an advisory opinion on the following issues: 1)Whether HB 1 violates the State Constitution and Revised Statutes by appropriating monies in excess of the official revenue forecast. 2) Whether the Constitution’s prohibition on contingent appropriations is violated by: (a) the inclusion of appropriations contingent on the passage of other bills, and (b) the inclusion of appropriations based on the occurrence of highly unlikely or uncertain events. 3) Whether the Constitution’s restrictions on the use of nonrecurring revenues are violated by the practice of transferring funds from constitutionally-authorized repositories of nonrecurring revenues into the state general fund to be replaced immediately by appropriations of new, nonrecurring revenues. Thank you for your attention to this request. Sincerely, Kirk Talbot Representative, District 78
The following legislators join me in my request: Cameron Henry, District 82 Jim Morris, District 1 Ray Garofalo, District 103 Thomas Carmody Jr., District 6 Alan Seabaugh, District 5 Dee Richard, District 55 Nancy Landry, District 31 Lance Harris, District 25 Clay Schexnayder, District 81 Brett Geymann, District 35 John Schroder, District 77 Joe Harrison, District 51 Nick Lorusso, District 94 Hunter Greene, District 66 John Berthelot, District 88 Rogers Pope, District 71 Greg Miller, District 56 Sherman Mack, District 95
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.