This Associated Press story running in Louisiana newspapers this past weekend falls squarely into the category of complex issue that nevertheless has significant implications for how the state budget will be tackled during the legislative session beginning today.  The story opens this way:

If lawmakers wanted to use it, Louisiana's "rainy day" fund wouldn't offer much budgetary relief for the state, because of structural glitches that limit access to the hundreds of millions contained within it.

The balance in the rainy day fund tops $775 million. But Commissioner of Administration Angele Davis, the governor's top financial adviser, said it would only offer lawmakers $18 million in net new budget aid if they chose to tap into it to ease budget cuts next year, and it could create new midyear budget shortfalls.

"As it turns out, the rainy day fund has a design flaw," Davis said this week.

Greg Albrecht, the chief economist for the Legislative Fiscal Office, on Friday called the rainy day fund "useless" as it's currently structured.

Here’s the Reader’s Digest Condensed version of the situation: In times of a projected budget deficit, the state Constitution (Article 7, Section 10.3) allows for the use of one-third of the Rainy Day fund – in this case, a maximum of about $258 million to supplement state General Fund expenditures for FY 10.  However, the Constitution also states that mineral revenues over a certain amount ($850 million) are deposited into the rainy day fund – in this case, if the current forecast stayed the same, about $240 million that would automatically be taken out of the state’s General Fund revenue at some point during the same fiscal year.  As the story continues:

That would mean a net gain of $18 million by using the fund.

If lawmakers tapped the rainy day fund and spent all $258 million on state services, they would have a $240 million midyear deficit that would require budget cuts only a few months later, Davis said.

"It's a huge risk to take for $18 million," she said.

Even without the glitch, Governor Jindal opposes using the Rainy Day fund because it would delay a necessary transition to a more sustainable level of government spending, and because using it would make the steep budget “cliff” that is expected in FY 12 all the more precipitous.  But now “the complex financing structure of the rainy day fund,” the AP story states, “helps bolster his case against it.”

Read the whole story here.