State government is facing a nearly $1 billion shortfall next fiscal year, largely because of drops in federal funding for Medicaid.
The Jindal administration outlined the $963 million shortfall Friday for legislators at a meeting of the Joint Legislative Committee on the Budget.
Commissioner of Administration Kristy Nichols said cuts will have to be made in the budget year that starts July 1 because Gov. Bobby Jindal opposes raising taxes to generate more revenue.
“We’ll look across state government,” she said.
The Jindal administration calculated the shortfall by subtracting the cost of keeping state government services at their current levels from expected revenue. The calculation is known as a continuation budget.
Some expenses, such as pay raises for state government employees, are included in the calculation even though they have been suspended for several years because of back-to-back budgets with not enough revenue to cover all needs.
Barry Dussé, state director of planning and budget for the Jindal administration, said $355 million — or a third of the shortfall — stems from a drop in federal dollars for the Medicaid program.
The federal government shares the program’s cost with states. Instead of paying 67 percent of the program’s cost, the federal government will only pay 62 percent.
Another part of the gap in needed funding is due to the Jindal administration’s reliance on one-time, or nonrecurring dollars for expenses that must be met year after year.
For example, the administration used $33 million in leftover hurricane recovery funds to pay for a pre-school program. Now those dollars must be replaced.
Also contributing to the shortfall:
- $218 million in one-time dollars that must be replaced to pay health care costs.
- $72 million needed for basic state aid to public schools because of 2.75 percent normal growth in the formula that calculates the aid and because of a drop in revenue sources, including lottery proceeds.
- $28 million in additional expenses for TOPS college scholarships, formally known as the Taylor Opportunity Program for Students.
- $22 million to give standard pay raises to state employees.
- $12 million in inflation.
Legislators already are grappling with health care cuts caused by an unexpected drop in federal funding.
The cuts impact the public hospitals in the LSU system that care for the poor and uninsured.
State Sen. Ed Murray, D-New Orleans, asked the Jindal administration to incorporate next year’s shortfall into consideration of the current round of cuts.
“I want to make sure ... we won’t have to come back and start over from scratch,” he said.
The Jindal administration is in the process of building the budget for the 2013-14 fiscal year. The budget funds hospitals, colleges and other public services.
Nichols said she is looking for ways state government can operate more efficiently.
State Sen. Francis Thompson, D-Delhi, suggested looking at the hundreds of millions of dollars in state government grants each year in tax breaks. The cuts reduce revenue.
He said eliminating bad deals in tax breaks is not the same thing as raising taxes.
Thompson said he does not want to make deals for rich people that take away services for the poor.
State Sen. Norby Chabert, R-Houma, urged the Jindal administration to be frank with legislators.
He said the communication lines sometimes break down, referring to complaints that the governor excludes legislators while making decisions.
“We absolutely want to continue that dialogue,” Nichols said.