13 June 2011

Committee action, Jun. 13: SB 53, SB 69, SB 113, SB 131

SB 53 by Sen. John Alario would amend the Constitution to cap the amount of money in the Millennium Trust Fund and use some of the money over that amount of $1.38 billion to fund the Taylor Opportunity Program for Scholars, increasing the amount from the MTF that goes to TOPS.

The House Appropriations Committee was told the diversion of the payments, at a 2.5 percent interest rate, would cost around $1.5 billion from money diverted from funding other items through the MTF, but they would generate $3.9 billion in terms of savings from the general fund to fund TOPS and in the elimination of the annuity payments associated with the fund (from the sales of tobacco settlement proceeds). When federal matching funds are involved theoretically over 40 years, the loss is $3 billion but the gain is (depending on where it was spent) as much as $12.3 billion.

After approval of technical amendments, Rep. Pat Smith, after basically to have it all explained to her again, asked about whether TOPS was retaining students. She was told statistics show TOPS did increase retention rates, but she said it also concerned her as to what happened afterwards, so that the bill was more keeping students in college, not in the state. Smith insisted the bill did not address presumed “high-ability” students who did not qualify for TOPS.

Rep. Page Cortez wanted to know more exact amounts. Because of the retroactive nature of the amendment, this year’s budget would get about $92 million, with $46 million or so in succeeding fiscal years until bond repayment when it would jump $71 million more around 2025. Cortez also asked how litigation could change the dynamics as a court order could dip the fund back under $1.38 billion; in that case, funding to TOPS would cease until it was attained again.

Rep. Bernard LeBas asked whether this created another dedicated fund. Deputy Chief of Staff Kristy Nichols said it was not, just redirecting an existing dedication. LeBas said it restricted money that could be used for undedicated priorities, but Nichols reminded him TOPS was as of now an undedicated priority.

The bill was passed without objection. Its companion SB 52 then was given the same treatment.

SB 69 by Sen. Ben Nevers would add a new technical and community college, actually promoting it from a technical school to community college. Nevers said a Regents report documented the area was underserved, and it was a net generator of revenue because transition costs would be absorbed by Northshore Technical. Louisiana Community and Technical Colleges Pres. Joe May said no new facilities would be needed and it would save money at other schools now serving those area students.

The bill passed without objection.

SB 113 by Sen. A.G. Crowe would amend the Constitution to change conditions under which to cut from budgets in deficit, from 5 percent (except for the Minimum Foundation Program at 1 percent), by allowing this to be used not just by a reduction in state revenues forecasted, but also in federal funds. Crowe said it would lead to better prioritizing and increase ability to attract matching funds.

Chairman Jim Fannin asked whether this applied to all federal funds, and was told these funds had to be used for matches and were recurring. He was concerned about the broadness and unpredictability of federal funding sources, he said. He was told, for example, loss of a grant would not count. Practically speaking, it would apply only to a few large programs.

Cortez asked how would it be known the condition was met, and was told when federal match rate changes occurred that then caused a decrease in the total amount of money coming in. But Cortez said there was no determination date in this, although he was informed some procedure was spelled out in the companion legislation SB 114.

Fannin asked for a motion, saying for the first time he couldn’t recommend a bill one way or another. He got one to move favorably, without objection.

SB 114 then came up, inviting more questions. It added that the state’s current services were required to be maintained at current levels to cause the trigger. It also would protect whatever funds existed from the new cutting power. Crowe noted these cuts to other funds could be shoveled back into them that what gets cut could then pick up matching funds. Further, the mechanism for determination was the federal matching funds rate published many months in advance of the state’s budgeting process.

It then was approved without objection.

SB 131 by Sen. Gerald Long would amend the Constitution to allow the cutting authority to be extended from 5 to 10 percent for non-constitutional funds and some select funds in a deficit setting, with legislative approval either in or out of session.

Fannin asked whether the eligible funds being cut included those not utilizing tax dollars, and was told they would be. Fannin expressed that the committee was skittish about allowing the state to come in and take dollars from funds coming from assessments and the like. Long did say that it applied only to those that had funds used for regulatory purposes, and others would be protected. Still, Fannin wasn’t sure that the division was airtight. Long said he was not averse to some kind of amendment to address this, but Fannin didn’t see a distinction to current practice.

Following, Rep. Brett Geymann asked for an explanation. He was told the difference was in terms of what was believed to be unencumbered which would determine whether a “one-time” money sweep could be used. When the time came, he objected to it, and the motion was defeated 9-10. That then triggered the voluntary deferral of this bill and the companion bill SB 137.

The good ones take two or three years to pass while the bad ones pass immediately.
Alario’s commentary on success rates of bills.

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