The fact that Louisiana has more than $2 billion in windfall revenues is good news for the treasury, but it’s also a test, of sorts, of our discipline for spending it. The good news is there are positive signs that we are up to it.

 

First, some background and a little clarification on a couple of points.

 

1.      So where did the money come from? Basically, the same place it’s been coming from: higher-than-expected sales and income tax receipts and the high price of oil. The sales and income tax increases are still largely fueled by hurricane recovery and that’s expected to continue for some time.

2.      Is it really a surplus? Yes and no. All of the money is a surplus in the sense that it’s extra money, or lagniappe. But according to the constitution, “surplus” has a legal definition – money left over at the end of a fiscal year. About half of the $2 billion is real surplus which means it can only be used for certain constitutionally approved things like filling the Rainy Day Trust Fund, capital expenditures, retiring debt and coastal restoration. But the other $1 billion is really more of a windfall, and it can be spent on anything if it’s done during the current fiscal year. If not, it, too, becomes “surplus” and its uses are restricted.

 

So what should we do with it? First, we should try to get a realistic yet conservative idea of how much of that new money can legitimately be considered recurring. With oil prices pegged at relatively low levels for budget purposes compared to what’s really happening in the market, it’s reasonable to expect that some of that money will come in on an ongoing basis for the foreseeable future. But a portion of it probably won’t. We should recognize that upfront and spend those dollars with the assumption we won’t have them again.

 

Fortunately, these non-recurring dollars offer a rare opportunity to continue to make strategic investments in our state.  Infrastructure and paying down some of the billions of dollars in debt in the state retirement systems would be good places to start. Another would be continuing to invest in our community and technical colleges to ensure they have the capacity to support the growth we need and expect from them in the years ahead. Those are investments that will strengthen Louisiana for the future.

 

But, when looking to the future, we should also look at making more significant investments in technology and research-based economic development that could help diversify and modernize our economy. Louisiana isn’t exactly Silicon Valley, but we do have some initiatives underway or in the works that have the potential to create thousands of high-paying, “new economy” jobs. That could do two things that are critical: help stem the outmigration of our most educated young people and actually attract new people to Louisiana. This kind of investment would be a sign that Louisiana is looking to the future, not stuck in the past as has too often been the case before.

 

The good news is there are indications that might actually happen. Incoming Commissioner of Administration Angele Davis said of the state’s windfall dollars that we must “invest strategically and wisely.”

 

And at CABL’s recent annual meeting Governor-elect Jindal himself remarked about the old bumper stickers that quipped “Lord, if you give us one more oil boom, we won’t blow it this time.”

 

Of course, this time might be the last time and let’s hope we’ll have the vision and the discipline to make the investments that could truly make a difference in our future.