Louisiana law makers have convened in Baton Rouge to resolve the $304 million budget shortfall for the current fiscal year.
Governor John Bel Edwards called for the 10 day session, which began Feb. 13. He says using the state’s Budget Stabilization Fund, also known as the Rainy Day Fund, as well as other strategic adjustments are key to balancing the budget. The plan does not include raising additional taxes or fees.
“As we drafted this plan, my administration sat down with every agency to identify where budget adjustments could be made to ensure that the priorities identified by the legislature in this year’s budget were funded,” Edwards said. “With only four months left in this fiscal year, adjustments of this magnitude are difficult. We have gone line-by-line in the state budget to identify cuts and other state general fund reductions, including identifying funds that could be moved to other areas of the budget.”
Edwards’ plan includes cuts across a broad spectrum of the state budget, which requires a vote of the full legislature. Without the special session, these cuts would be concentrated to the Louisiana Department of Health, higher education, K-12 education and the Department of Corrections, according to the Louisiana Constitution. The plan does not include cuts to K-12 education (the per pupil allocation of the MFP), higher education, TOPS, waiver programs, the Department of Corrections or the Department of Children and Family Services.
Edwards said this is “the most responsible approach” to solving the shortfall until the legislature can make structural budget changes in the regular session, which begins April 10.
“If members of the legislature choose not to use the Budget Stablization Fund, which was intended for this very purpose, priorities that are currently protected will be exposed,” Edwards said. “I look forward to working with every member in the session to lessen this burden on Louisiana families.”
State Rep. Dodie Horton (Dist. 9) said her desire is to prioritize budget cuts according to need and to not cut services that are vital to the health and welfare of the citizens.
“Instead of cutting from the top, they typically cut from the programs we need,” Horton said. “They collected almost $2 billion from the taxes that were raised in the first five month session and they still want more. I think that’s outrageous. We’ve got to start doing something different. We should eliminate the waste and use money to help more people. I want to make positive changes for the citizens.”
Senator Barrow Peacock (Dist. 37) knows that cuts will have to be made, but he hopes they don’t come with the usual scare tactics.
“I hope that as they are made, that they are done where they don’t inflict fear and harm on the most vulnerable in our state,” he said.
Peacock also said he’s not in favor of using the Rainy Day Fund unless the Governor can show an increase to employment numbers.
“Our employment numbers are down 26,000 from the high two years ago,” he said. “We are in a recession as a state. As our economy and state is down, I believe state government has to make adjustments.”
Highlights of Gov. Edwards’ plan include (* indicates items that can only be addressed by the full legislature during a special session):
• Use of the Budget Stablization Fund – $119.6 million*
• 2.5 percent reduction of state general fund to the judiciary – $3.79 million*
• 2.5 percent reduction of state general fund to the legislature – $1.65 million*
• Excess funds from the Louisiana Legislative Auditor to construct a new office building – $8 million (This reduction does not impact the operations of the agency)*
• Attorney General’s escrow account balance – $3.98 million
• 5 percent reduction in statutory dedications from the Attorney General – $1.9 million
• Reduction in statutory dedications from the Department of Transportation and Development – $1.46 million
• The Louisiana Department of Health – $127.8 million in reductions and adjustments
Prior to Gov. Edwards taking office, the state’s Rainy Day Fund has been used to stabilize the budget four times over the past eight years for a total of $517.4 million. Those funds were used to eliminate budget shortfalls and were combined with various one-time funds to pay for recurring expenses.
Additional facts regarding the FY 17 budget:
• The FY17 budget was crafted without any one-time money, necessitating $800M in recurring dollars; thus, the FY17 budget fell $326M short of funding expenditures necessary to maintain real FY16 spending levels.
• The FY17 budget already has been adjusted by $313M to resolve the FY16 deficit.
• The FY17 budget does not include any funds for flood related expenses; departments and agencies have advanced $246M in unbudgeted dollars for flood response; ninety percent will be reimbursed by the federal government but mostly not in this fiscal year.