‘Rainy day’ fund could be tapped

Published 12:46 am Monday, November 17, 2008

BATON ROUGE (AP) — As they grapple to fill in the gaps in next year’s budget, the Jindal administration and lawmakers could tap into Louisiana’s multimillion dollar ‘‘rainy day’’ fund to try to stave off some deep cuts.

Nearly $285 million would be available from the fund to put toward the more than $1 billion shortfall projected for the new fiscal year that begins July 1, but the governor’s top budget crafter says that’s not on the table yet.

Commissioner of Administration Angele Davis said she wants agencies to improve efficiencies and cut low-performing programs to streamline government and balance the budget. She’s asked departments to review their programs and judge their performance as part of the documents they submit for consideration as Davis’ office works on the governor’s budget proposal.

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As for the rainy day fund? ‘‘We haven’t looked at that as an option. We’re not considering that at this time,’’ Davis said in an interview. ‘‘We feel its premature to have that discussion.’’

State officials won’t know the latest estimates of how much money the state is expected to have for spending in the upcoming 2009-10 year until a revenue forecasting panel meets in December. Davis said she wants to see those numbers before any talk about tapping the rainy day fund.

However, some lawmakers already have said they’re eyeing the money as a partial fix to next year’s budget balancing problems, rather than make dramatic cuts to health care or education.

‘‘I think that’s a strong possibility. That’s what it’s there for,’’ said Sen. John Alario, D-Westwego, a member of the Senate Finance Committee and a lawmaker for more than 35 years. ‘‘It’s fixing to rain on us pretty significantly.’’

Formally known as the Budget Stabilization Fund, the rainy day fund is built up from budget surpluses over the years and some oil and gas dollars that are constitutionally directed there.

The fund can be tapped when the official state income forecast for an upcoming budget year is less than the current year — a situation that Louisiana appears on track to meet. Only one-third of the fund can be used in a year, and that takes a two-thirds vote of the Legislature.

An $854 million balance is projected for the rainy day fund by this budget year’s end, said Greg Albrecht, the chief economist for the Legislative Fiscal Office. That would mean nearly $285 million could be used next year, if a super-majority of lawmakers agreed.

The projected gap in next year’s budget might be a persuasive case for the Legislature.

Fiscal analysts have said it would cost $1.3 billion more than the state has to spend next year to continue running all programs and keep up with the costs of inflation.

The two biggest areas not protected from slashing are higher education and health care services for the poor and uninsured.

Gov. Bobby Jindal will submit his recommended budget to lawmakers before they return for a regular legislative session in April. Lawmakers will craft a final version of the budget during that session.

To devise the administration’s proposal, Davis said she’s considering everything from hiring freezes to the elimination of programs. Last month, she sent department chiefs and number-crunchers a memo asking them to grade the performance of each program they oversee.

The performance review request is a new addition for agencies submitting their budget proposals to Davis’ office. Davis said she expects the information will be useful in determining where the state should invest money and where the state should cut. If a program is underperforming, it would be on the chopping block, she said.

‘‘It’s going to help us with fundamentally changing and reforming the way that we do budgeting today,’’ Davis said.