Wednesday, January 28, 2009

House Approves $68M Deficit Appropriation

On Wednesday, the House leadership rolled out and passed HB 1383 by a vote of 82-37, which would seek to make a deficit appropriation for K-12 education to offset Governor Barbour's cuts that were announced last week.

A "deficit appropriation" is one that seeks to provide bridge money to the end of the current fiscal year with the assumption that enough revenue will come into the state's coffers by year's end to cover the appropriation.

HB 1383's premise was to appropriate $68M, which would cover most of the Governor's budget cut. The number of $68M came from the House's revenue estimate of $68M for cigarette tax revenue for the rest of this fiscal year, assuming- a) the Senate passed the House's 82-cent cigarette tax increase, and b) if it all gets done by March 1.

However, the only problem with the legislation is that neither of the above scenarios will likely happen. The Senate is not going to 'ok' an 82-cent cigarette tax increase. A more probable outcome would be that the Senate would pass out something like a 24-cent increase, with the bill going to conference and the final cigarette tax ending up around 60-70 cents. So while I completely agree that we should divert as much money as possible to assist cash-strapped school districts in the wake of budget cuts, I do not think it wise to appropriate revenue that has not yet been generated.

My analogy for the situation is this. Suppose I'm interviewing for a job that pays a great sum of money. I've interviewed once and feel pretty good about my prospects. And even though I have two more interviews left to go, I go off and buy a mansion using the "money" that I think I will make if I get that job.

HB 1383, while a noble gesture, probably gives many school districts a great deal of false hope- because the money will not be there in the end. Two smarter options would have been to a) appropriate a smaller, lump-sum amount to K-12, such as $30M, which new cigarette tax revenues could cover; or b) make an appropriation that will "make whole" those few districts who will have negative balances at the end of the fiscal year.

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