State lawmakers say they will pass a budget before the legislative session ends on Monday. But as the clock winds down, they aren’t there yet.
The House on Friday unanimously rejected the Senate’s suggested spending plan for the budget that begins July 1 — after several hours of wrangling by the chamber’s top budget leaders and a failed push by the Governor’s Office to urge members to accept the Senate’s proposal.
The nearly $26 billion budget now heads into negotiations between leaders of the two chambers.
“Whether I like it or not, we will have a budget by the time we finish here on Monday,” said House Appropriations Committee Chairman Cameron Henry, R-Metairie. “The goal is to leave here with a budget.”
“We’re not that far off,” Henry added, though others, including Gov. John Bel Edwards, have described the differences as being substantial.
In the House version of the budget, the popular Taylor Opportunity Program for Students was funded at more than two-thirds of its $300 million budget. The Senate dropped that down to slightly less than halfway funded.
The Senate also carved out protections for waiver programs that provide health care services to the elderly and disabled at the expense of the state’s safety net hospitals.
The Senate version also gave health leaders the decision of how to divvy up the limited hospital dollars, meaning some contracts could be voided, while the House outlined funding for each individual hospital to ensure all contracts were protected.
Whatever agreement is reached, the budget is likely to shift in the coming weeks as lawmakers head into a special session to try to address the state’s $600 million shortfall.
When the House started the day Friday, several members believed there were enough votes to accept the Senate version with the expectation that disagreements could be hashed out in the special session.
Edwards has called on the Legislature to raise additional revenue — largely through tax increases — to bridge the estimated $600 million gap.
House Speaker Taylor Barras, a New Iberia Republican who will be working on the budget negotiations, on Friday revealed a plan that could help shrink that hole, but some already are raising objections to the proposal, with the Edwards administration calling it “problematic.”
Barras said the state can pull $74 million from statutory and constitutional dedications for state agencies to free up money in the general fund. Barras’ resolution, which passed the chamber in a 89-6 vote, would instruct the state treasurer to shift money to pay down debt and free up funds in the budget.
The siphoning plan initially was part of the House budget proposal, but it was removed by the Senate amid concerns about whether it was constitutional.
Barras, a banker, said he’s studied the state laws related to the plan, as well as the funds that would take about a 3.3 percent hit, and said he believes the state should have been taking a cut of the money that flows through the debt fund all along.
“It’s just pretty eye-opening the benefit to our budget,” he said.
Louisiana’s unique Bond Security and Redemption Fund is used to bolster the state’s credit rating and reassure bondholders. Nearly all money that flows into the treasury goes through that fund.
Under state law, certain funds normally protected under statutory and constitutional dedications for certain services can be skimmed to help pay down the debt. For the past 18 years, the state has relied largely on general fund dollars to make debt payments, though.
“We’ve been taking out of the wrong account,” Barras said. “It’s just too strong for me to let it go by.”
State Treasurer John Kennedy agreed that the proposal is legal and said he made the decision years ago not to shift the money around.
“I just continued the practice we had always done. I saw no need to change it,” he said.
He said he’ll follow the Legislature’s direction, though.
“That’s $74 million in taxes that the governor doesn’t have to raise, and it helps the hospitals and TOPS,” he said.
Barras said he wants the money to be redirected to fund TOPS and the state’s safety net hospitals.
But the plan is not being embraced by the Edwards administration.
“It’s basically a fund sweep,” Commissioner of Administration Jay Dardenne said. “It’s going to have a dramatic effect on agencies that have already been cut.”
The House initially included a similar proposal in its version of the budget, but Edwards raised objections based on his interpretation that skimming fees and some other types of payments would be unconstitutional.
Barras said his plan leaves fees, donations, grants and federal dollars intact and digs only into the dedications.
The funds normally would be directed to state services, but the siphoning plan gives lawmakers more say in how the dollars are spent.
Based on figures provided for the earlier proposal, skimming just the dedications would take about $14 million from the Louisiana Department of Health, formerly known as the Department of Health and Hospitals. Another $5.9 million would come from public safety; the Department of Wildlife and Fisheries would lose about $4.1 million of its dedicated dollars; and the Department of Transportation and Development would take about a $12.9 million hit.
“It’s an additional cut in next fiscal year to agencies that are already experiencing cuts,” Dardenne said. “It’s more of the same, and this administration is not going to continue to use gimmicks.”