Louisiana’s public colleges and universities secured a victory Monday when the House Appropriations Committee approved a budget proposal for next year that would give them the same amount of money they currently receive, thanks to $615 million in new tax revenue approved by the full House on Thursday.
But while the higher education institutions have staved off potentially deep budget cuts at least for now, the proposal approved by the committee would leave a big shortfall for public health care.
Legislative leaders have vowed to find enough money before the 2015 session ends in a month so that neither higher education nor health care suffers budget cuts next year. But that effort was thrown into question Monday by the specter of a legal challenge from the state’s most powerful trade organization against several of the tax increases approved Thursday.
Stephen Waguespack, president of the Louisiana Association of Business and Industry, said four measures approved Thursday did not receive the two-thirds vote required by the state constitution to raise taxes or repeal existing tax exemptions. About $550 million of the $615 million approved Thursday could face a court challenge.
The $615 million is a new estimate from the legislative staff of the amount raised Thursday, down from $664 million. The Appropriations Committee found another $34 million in savings to bring the total amount of new money to $650 million.
In approving the first draft of the 2015-16 state budget, the Appropriations Committee allocated $575 million out of the $650 million to the state’s higher education institutions, to the delight of their supporters.
“It’s a good first step,” F. King Alexander, LSU’s president and chancellor, said in an interview Monday. “But it’s only in the second quarter. We just want to be held whole.”
Higher education institutions have been facing a cut of up to 82 percent compared with their current funding of about $740 million.
House Appropriations Committee Chairman Jim Fannin, R-Jonesboro, said health care would get more money if the Legislature raises more revenue or makes other budget cuts, or if state officials certify that tax collections are higher than anticipated.
Health care is short by about $190 million in state aid, which translates into $500 million to $600 million when the federal match for state health care dollars is factored in.
The shortfall in health care means less money for poor pregnant women and children, the developmentally disabled, the working poor who don’t have health insurance and the elderly living in state nursing homes.
As part of the $190 million, legislators have yet to find the revenue to provide $60 million to the private hospitals that are now managing nine state hospitals, including the big New Orleans hospital slated to open in August. As The Advocate reported Sunday, some of the private companies are threatening to cancel their contracts with the state after the session ends if the money doesn’t materialize.
“There’s more work to be done,” said Paul Salles, chief executive officer of the Louisiana Hospital Association. “We’ll continue to work with the Legislature.”
The health care funding gap also means the state needs $56 million to cover the health insurance and retirement costs of former employees at the LSU medical schools in Shreveport and New Orleans, as well as to pay for the continued upkeep of those institutions.
The House Appropriations Committee did restore $21 million for the Greater New Orleans Community Health Connection, which provides health and mental health care to 57,000 uninsured residents in the parishes of Orleans, St. Bernard, Jefferson and Plaquemines.
In all, the House says the state needs another $295 million next year. Besides the $190 million for health care, legislative leaders want another $50 million for K-12 public schools statewide to keep up with enrollment growth and another $50 million for the state’s museums, public parks, state elections and the like.
Monday’s action by Appropriations is only the first step in approving next year’s estimated $24 billion budget, which takes effect on July 1. The cuts to health care are part of about $1 billion in state spending that would be eliminated under the current version of the budget.
The full House will take up the budget on May 21. Once approved, it would go to the Senate Finance Committee and then on to the full Senate before the two chambers hash out their differences. The budget approved Monday will likely be changed each step of the way. Gov. Bobby Jindal will have to approve the budget, and he has said he would veto it if it includes what he calls net tax increases.
With the state facing a projected deficit of $1.6 billion next year, the $650 million in hand at this point would mean about $1 billion in cuts.
According to an analysis last month by the Public Affairs Research Council of Louisiana, spending $1 billion less next year would mean not allowing the paychecks of state workers to keep pace with inflation, less travel by state workers and using some $300 million in one-time money available through a tax amnesty program, by selling state property or winning legal judgments.
The Governor’s Office also is projecting savings of $145 million by adopting the recommendations of the Government Efficiencies Management Support project, which came from a report by the consulting firm Alvarez & Marsal. PAR has questioned whether the government would realize the full $145 million in savings.
The state would have even less money next year if LABI or another group successfully challenges Thursday’s passage of the four measures cutting tax exemptions and exclusions by about 20 percent.
“The language of the constitution seems to be fairly clear to us and brings into question some of those vote totals,” said Waguespack, who previously served as Jindal’s executive counsel and chief of staff.
“This parliamentary decision could put any final budget solution in a legally precarious position,” he added.
In the four instances Waguespack cited, representatives reduced tax credits and exemptions with less than 70 votes — or two-thirds of the House.
The bills’ favorable votes ranged from a low of 58 to a high of 66.
The measures would reduce by 20 percent certain income and franchise tax credits as well as some corporate income tax exclusions and deductions; and would eliminate some tax breaks that lead state government to write checks to businesses.
House Speaker Chuck Kleckley, R-Lake Charles, said raising the cigarette tax — as the House voted to do on Thursday — required a two-thirds vote but scaling back tax breaks did not. He relied on a 1993 attorney general’s opinion in determining only a simple majority vote was needed. No legislator challenged Kleckley’s ruling on Thursday.
Waguespack said even a “partial repeal” envisioned in the bills would trigger the two-thirds vote. None of the measures called for suspension of laws, which the majority vote determination responded to, he said.
The seriousness of Waguespack’s threat is not clear. It could simply be a negotiating ploy to keep the Legislature from putting a higher tax burden on LABI’s members.