THIS COULD BE YOU

You could say legislators in Illinois really dropped the ball when they failed to pass an operating budget for their state prior to the 2016 fiscal year. Editorial writers from the Land of Lincoln, meanwhile, said a whole lot more, even citing political malpractice in Springfield, when inaction again gripped the Illinois General Assembly not long after, leaving fiscal year 2017 without a budget. While it’s difficult to fathom how a bicameral legislature created 200 years ago could break down so thoroughly, the situation grew murkier when Illinois legislators allowed the state to go budget-less for most of the current fiscal year as well.

That scenario may hit too close to home for subscribers of LaPolitics Weekly, begging an important question with no easy answers. What, exactly, would happen if the Louisiana Legislature followed the same path over the next couple of months and failed to pass a budget before the start of the new fiscal year on July 1? “I haven’t even thought about what would happen. We have never had that conversation,” said Treasurer John Schroder, reflecting to his own time in the House.

That’s not to say the possibility is being ignored by the Bayou State’s fiscal-watchers. “We’re very much in uncharted territory,” said Commissioner of Administration Jay Dardenne. “Obviously, it’s being looked at.”

Matthew Block, the governor's general counsel, sounded just as uncertain when interviewed today. “We don’t have a firm or final answer right now on what will happen in that— hopefully — not very probable or possible eventuality. The Constitution doesn’t give a whole lot of guidance.”

No one knows what will happen because the state, at least in modern times, has always started a fiscal year with a budget. Plus the law is “silent” on options, according to Dardenne. Elsewhere, there are other states that have failed to pass budgets in recent years, leading to government shutdowns. The Associated Press has reported that two dozen state have this shutdown option in their laws, but Louisiana is not one of them.

With little else to lean on for guidance, Illinois’ recent past may present our best case study. Lawmakers there failed to pass a budget for more than two years before eventually adopting a plan late for the current fiscal year. The stalemate took roots when GOP Gov. Bruce Rauner was elected alongside a Democratic-controlled statehouse. (The Republican governor, a multimillionaire, has since blamed his budget failures on the Democratic House speaker.) As for the next fiscal year, the Illinois General Assembly, much like the Louisiana Legislature, has yet to advance anything substantive.

What happened on the ground in Illinois in the wake of this legislative inaction is hard to believe. Government payroll became sporadic, prompting one Illinois lawmaker to drive an Uber to support his family. State-funded entities, among them Medicaid and mental health providers, weren't paid on time. In reaction, they began suing the assembly en masse for their money. Homeless and domestic violence shelters were shuttered, lottery winners didn’t get their prizes and various workforces were thinned. Prisons at one point were in jeopardy of closing and students left state universities by the thousands out of fear their institutions, which receive no constitutionally-dedicated funds, would not survive.

In an effort to stop the bleeding, the Illinois Assembly gathered for special sessions that produced six-month stopgap measures. But the money always ran out. Then one day Illinois officials took out their calculators and realized the state had more than $15 billion in unpaid bills — with an annual average budget of $36 billion. Illinois managed to mitigate that figure with state bonds, leaving it with a now-$6 billion deficit and the lowest credit rating in the country.

Those familiar with the midwestern statehouse say the Democratic-controlled assembly isn't in any hurry to pass a budget for fiscal year 2019 because liberal and moderate lawmakers want to wait and see if they can replace their incumbent Republican governor with a Democrat this fall. (Sound somewhat familiar?)

Putting doom and gloom from across the state line aside, Louisiana officials sound confident that our Legislature will pass a budget by the end of June, if not at the month’s outset. Block, however, argued that some legislators do not fully understand the repercussions of budget inaction. “Some believe the budget automatically rolls over and we keep operating under the previous year’s budget, which is not the case,” he said.

Pushed for likely scenarios, administration officials did take some educated guesses about what would happen in Louisiana without a budget in place. For starters, state taxes and other sources of revenue wouldn't necessarily disintegrate, so money would keep coming in. The rub is whether the state and its agencies would be allowed to spend the cash under such a predicament.

In the short-term, the state could struggle to make payroll while keeping afloat the Legislature, courts, police, corrections and all other departments. In the long term, Louisiana's credit rating would probably be devastated.

What Louisiana would have to do under such circumstances was a topic of discussion between the governor’s office and the treasury during the 2017 special session. But Block said those conversations were halted when a budget emerged from the rubble. As of Thursday afternoon, those talks haven't resumed, especially since state officials are still viewing the cliff’s edge from a safe distance. “We can see it,” Block said, “but we’re not there."

This story was originally published in LaPOLITICS Weekly on April 26, 2018. Wish you had read it then? Become a part of our elite community by subscribing today!

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