The state House is again considering a plan that proponents say will free up tens of millions of dollars each year, under a unique maneuver of cutting into normally protected funds.
If approved, House Speaker Taylor Barras says his proposal would free up an estimated $97.5 million in next year's budget, but Gov. John Bel Edwards' administration and some Democratic lawmakers remain skeptical.
The plan, which was shot down by the state Senate last year, was resurrected as state lawmakers meet in a special session to try to close a $304 million deficit in the current budget that ends June 30. The proposal would have no impact on that mid-year shortfall, the state's 15th in the past nine years.
Barras, a New Iberia Republican who is a banker by trade, argued on Thursday that his idea could help provide more financial stability in the future.
"Some say it's unconstitutional, I say it's completely the opposite," Barras told the House Appropriations Committee.
The proposal, which comes in the form of a resolution instructing the state treasurer to begin the process, will now head to the full House for consideration. It passed committee in a 21-2 vote. It would also need to win approval by the state Senate that rejected the idea less than a year ago.
Barras and other backers of the proposal say that a portion of the fees and statutory dedications that go into a debt fund should have been going to pay down the state debt, freeing up money for other areas of the budget.
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Barras said he thinks the plan is backed by state statute that governs the fund and the monies that typically just flow through it.
"I don't consider it a fund sweep," he said "That's using the fund as it was set up in statute to pay the state debt."
The process would effectively be a cut to funds that currently only pass through the debt fund. For example, estimates for the coming year say the proposal would pull $19.6 million meant for the transportation trust fund that is meant for improvements to roads and other infrastructure projects. It would draw down nearly $1.8 million from the Hospital Stabilization Fund that allows local hospitals to draw down more federal Medicaid matching funds, and it would take $1.9 million from the fund that goes toward paying for the popular Taylor Opportunity Program for Students scholarships.
The cuts vary but would be spread across even obscure funds ranging from the state's Battered Women Shelter Fund to funds held by parish-level convention and visitors bureaus.
Barras said that any concerns about cuts could be addressed when the Legislature builds the budget, with the opportunity to back-fill some of the cuts.
In a statement after the committee vote, Edwards called the plan a “dangerous, back-door gimmick that has the potential to seriously threaten the state’s credit rating."
"This is an especially precarious time to be taking money from TOPS and the Transportation Trust Fund, as this proposal does, given that our state faces a massive infrastructure backlog," Edwards said. "If these members want to make cuts to these programs, there is a much more transparent way to do it that doesn’t cause unnecessary harm to the state."
Commissioner of Administration Jay Dardenne told the Appropriations Committee during the hearing that the administration had been "very interested" when the idea was proposed last year, but ultimately deemed it unworkable and a potential threat to the state's financial stability.
"Confusing this issue is what concerns me, about what it may say to investors and Wall Street," Dardenne said.
Dardenne called it a "procedural nightmare."
"This will not be an easy process," Barras acknowledged, but he said it would be worth it to free up the funds.
House Speaker Pro Tempore Walt Leger III, D-New Orleans, questioned whether state law provides the proper framework.
"The way I read it, there is no instruction on how to distribute the funds," he said.
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The resolution's approval came a day after the same committee to a significant step toward closing the $304 million mid-year deficit the state currently faces.
Other items on the agenda included the House Democrats plan for closing the mid-year deficit and a resolution needed to tap into the state's rainy day fund.
The committee OK'd a vehicle for transferring $74.6 million from the rainy day fund. Tapping the rainy day fund requires approval from two-third of the members of the House and Senate.
It rejected the governor-backed budget proposal carried by Leger, but two other bills are advancing to the floor that can still be altered.
One, pushed by Appropriations Chairman Cameron Henry, R-Metairie, and other GOP leaders in the chamber, would use $74.6 million from the state's rainy day fund. The other, which is more experimental, would use none of the rainy day fund but broaden cuts.
Both bills are expected to get full vetting on the House floor on Friday. Anything that passes the House would then go on to the Senate for consideration.
Gov. John Bel Edwards had asked legislators to pull $119.6 million — the maximum amount allowed by law — to lessen cuts to state departments with four months left in the budget cycle.
Henry and other Republican members in Wednesday's hearing stressed their hope that the state could use the deficit to establish long-term cuts. The money they hope to cull from various budgets would lead into decreased budgets when the Legislature meets in April to craft a budget that will begin July 1, they said.