Louisiana House Bill HB509

Louisiana 2016 Regular Session

• Introduced: 3/3/16
• Refer: 3/3/16
• Refer: 3/14/16

Caption

(Constitutional Amendment) Provides for allocations of mineral revenues and changes to the Budget Stabilization Fund

Impact

The proposed changes in HB509 represent a significant shift in the handling of the state's mineral revenues. By lowering the base revenue threshold and eliminating the potential for future increases, the bill provides a more stable and predictable framework for managing the Budget Stabilization Fund. Furthermore, any mineral revenues exceeding the cap will now be directed toward addressing the unfunded accrued liability of public retirement systems, strengthening the financial outlook for retired employees of the state. This amendment aims to bolster the fiscal responsibility of the state while ensuring its obligations to public workers are met.

Summary

House Bill 509 proposes amendments to the Louisiana Constitution regarding the Budget Stabilization Fund and the allocation of mineral revenues. Currently, the fund allows for the deposit of mineral revenues collected over a base amount. HB509 seeks to decrease the base from $950 million to $700 million and eliminates the legislature's authority to increase this base every ten years. The bill also sets new caps on the fund's balance, increasing the previous limits on appropriations or deposits from 4% of the state's total revenue receipts to 6% beginning in FY 2018-2019 and 10% from FY 2019-2020 onward.

Sentiment

Responses to HB509 have varied among legislators and stakeholders. Advocates argue that the bill is a step towards ensuring the state can adequately fund critical areas, such as retirement liabilities, using excess funds. They view the incapacity for increased base mineral revenue as a manageable adjustment that will not significantly hinder fiscal stability. However, critics of the proposed amendments express concern that the reduced base might limit the fund's growth and undermine its intended use as a financial buffer during economic downturns. They argue that the changes could detract from the fund's primary purpose of offering stabilization resources during fiscal crises.

Contention

One of the primary points of contention surrounding HB509 is the proposed reduction of the base amount for deposits into the Budget Stabilization Fund. Opponents fear that by changing this base, the fund could diminish over time, especially during economic fluctuations. Additionally, the decision to place mineral revenues above the cap towards retirement debt raises questions about its appropriateness concerning long-term state financial planning. As legislators prepare for voting, discussions on the bill highlight broader themes of fiscal management, accountability, and long-term obligations to public sector employees.