How Lawmakers Might Launder the State’s Amnesty Money

UPDATE (12-12-13): The Associated Press is reporting that “(d)elinquent taxpayers paid $435 million during Louisiana's recent tax amnesty period, more than twice the amount included in this year's operating budget, the Department of Revenue announced Thursday.”

Sources in the Legislature and the Department of Revenue tell LaPolitics that the recent tax amnesty program generated in excess of the $200 million that was budgeted. While the official overage has not yet been announced, that means lawmakers will indeed have some extra cash to spend.

While there are restrictions in state and constitutional law as to how the additional money can be expended, lawmakers will more than likely use some clever accounting to get around those prohibitions to funnel all of the money into the state budget.

But before that can happen, the Revenue Estimating Conference will need to determine whether the extra amnesty money is recurring or non-recurring. The latter category, known as one-time money, includes restrictions on where it can be placed, according to the constitution and the enacting legislation:

— 25 percent must go into the Rainy Day Fund

— 5 percent must be used to pay down unfunded accrued liability (retirement debt)

— 70 percent can be spent on either of the priorities above, in addition to debt defeasance, higher education deferred maintenance and highway projects

There's more flexibility, however, for the recurring portion of the excess, and House Ways and Means Chairman Joel Robideaux, R-Lafayette, is already urging his colleagues to approach with caution.

“For the dollars recognized as recurring, this amount can be spent in our operating budget,” Robideaux wrote in a letter to lawmakers last week. “We may want to set these funds aside until the budget situation becomes more clear.”

Lawmakers desperately needed the amnesty program, which allows taxpayers to settle back taxes with reduced penalties and interest, to bring in $200 million this year. The sum is required to cover a gap in the Department of Health and Hospital’s Medicaid program and to draw down $340 million in federal money.

As for how much of the current haul will be recognized as one-time, or non-recurring, the last tax amnesty program held in 2010 offers some guidance. It had an overage of $482 million, of which $242 million was identified as non-recurring.

While that money was not legally permitted to be placed directly into the operating budget, lawmakers still found a way. They put the entire sum in the Coastal Protection and Restoration Fund, as allowed by the constitution, then moved it into the Overcollections Fund, as permitted by statute. From there, lawmakers put all of the money in DHH’s budget.

The other $240 million from 2010 was identified as recurring and spent as follows:

—$76 million went to the Department of Revenue to cover related costs

—$75 million went into the Rainy Day Fund, although it was swept out and appropriated to the Board of Regents

—$90 million was deposited into the Coastal Protection and Restoration Fund, although that was swept out as well and appropriated to DHH

“The bottom line is that all of the $482 million in 2010 amnesty proceeds eventually ended up in the operating budget,” writes Robideaux.

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