Colleges and universities were spared by the Jindal administration proposal to rebalance the state’s operating budget; that means health care will bear the brunt of reducing a mid-year deficit of about $487 million.
Commissioner of Administration Stafford Palmieri explained that budget writers strung together new revenues from lawsuit settlements, sweeps of unused dollars, about $149.7 million in cuts and a generous infusion from the state’s rainy day fund to create a plan that brings this year’s spending and last year’s into line with available revenues.
The plan avoids layoffs and protects vital services, but a large chunk of it repurposes earlier fixes and pushes the problem to when a new governor and new Legislature goes into office.
Gov. Bobby Jindal is term-limited and voters on Saturday will choose between Democrat John Bel Edwards and Republican David Vitter as the next governor.
Jindal, fresh from the presidential campaign that he suspended Tuesday, told reporters Wednesday morning that he talked with agency heads and legislative leaders. But he left Palmieri to unfurl an overview of the proposal during a late afternoon phone conference, which would rebalance his last budget. Jindal has been forced to close midyear deficits each of his eight years in office.
The Revenue Estimating Conference earlier this week officially reduced by $370 million the amount of money state government would have to spend in this fiscal year’s $25 billion budget. Also, when the numbers came in for the last fiscal year, which ended June 30, it was discovered that the state had overspent by $117 million.
The Joint Legislative Committee on the Budget, which is charged with making adjustments to the budget when the House and Senate are not in session, takes up the administration’s rebalancing proposal on Friday. The panel will have to approve much of the proposal.
One aspect — tapping the state’s rainy day fund for $28.2 million — will require the full Legislature’s approval by mid-December and those ballots will be mailed starting Friday, if the committee approves.
Palmieri said that if the Legislature doesn’t approve the use of the rainy day money, then higher education budgets will have to be cut.
State employee layoffs were avoided, but agencies won’t be able to fill vacancies, Palmieri said. Administrative expenses, such as non-essential travel and supplies, have been frozen and will remain so.
Palmieri said the administration found about $278 million in “excess revenues” — above the amount appropriated by the Legislature — that accumulated over time. “Those revenues get to be a very big number when you put them all together,” she said.
The administration also plans to use $31.7 million in additional revenues from various sources, including $4 million from the settlement of legal claims against Transocean, which owned the drilling rig involved in the 2010 BP Deepwater Horizon incident.
But healthcare takes the biggest hit, though Department of Health and Hospitals Secretary Kathy Kliebert said she doesn’t expect to cut services.
Part of the plan calls for rolling back a program to detect fraud in Medicaid, the government program that pays for healthcare for the poor — roughly one of every four Louisiana residents.
Added to the budget-balancing effort is an anti-fraud initiative that means hospitals, physicians and other health care providers will be delayed in getting reimbursed for the services they provide. An estimated $126.2 million is anticipated to be saved by extending from seven days to 21 days the period allowed for review of claims to verify their legitimacy and accuracy. The mix also includes new tax amnesty dollars.
But among the administration’s largest deficit-filling ideas is the taking of money DHH had used to close a gap in Medicaid and using it instead to deal with the overall deficit.
“We have a constitutional obligation to close the deficit in 30 days. That’s what we are going to do,” Kliebert said. That takes a higher priority.
In late October, DHH announced it was running a $516.1 million deficit in its $8 billion Medicaid program, but had come up with “internal solutions” to close the gap.
The budget fix will have to wait for the new administration although Kliebert said the agency will continue to work on solutions. “We will have to reassess and work with the new administration on what we need to do internally,” she said.
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