Legislators entered the 2011 regular session under the dark cloud of a $1.6 billion budget shortfall.
They returned home two months later with a $25 billion budget that they said would not devastate state government.
The state spending plan is essentially what the governor proposed, but using different ways of funding it.
Some cuts were made. A program for at-risk youths, for example, will be eliminated. Some jobs will be lost, although less than 1,000 of the eliminated positions actually are filled. State employees won’t get pay raises for another year.
Standstill funding coupled with moving money sitting unused in funds eliminated the rest of the shortfall in the fiscal year that started Friday.
Federal stimulus funding helped states across the nation get through lean economic times. Now those dollars are evaporating at the same time health-care costs are rising.
Making the situation worse, Louisiana did not just use stimulus dollars as an enhancement. Instead, the state used the money to pay bills in place of dollars that otherwise would have come out of the state general fund.
The administration of Gov. Bobby Jindal warned legislators of a $1.6 billion shortfall in the money needed to continue the same level of services in the upcoming fiscal year.
State Rep. Jim Fannin, D-Jonesboro and the budget bill’s sponsor, said he doubts the shortfall ever was as staggering as $1.6 billion.
He said that figure included inflation as well as wants, rather than needs.
“We only had a $1.2 billion problem,” Fannin said.
State officials began whittling down the shortfall by nixing what they perceived as wants, including nearly $100 million in annual pay raises and inflationary health-care expenses.
The Jindal administration tossed in $225 million in “efficiencies.” Legislators demanded to know what the efficiencies were. The administration never provided a concrete list, but explained that efficiencies referred to instances in which dollars, other than the state general fund, could be used.
For example, a maintenance fund might be used instead of the state general fund that pays much of state government’s daily expenses. By relieving the burden on the state general fund, that created an efficiency.
Also helping reduce the shortfall were cuts made last fiscal year because of money woes. Instead of restoring that funding, the reductions were maintained.
State general fund revenue grew by more than $500 million, thanks to personal income and other tax collections, curtailing the size of the shortfall.
Still, the state was short of needed money to provide services, prompting Jindal to push for selling prisons and forcing state workers to put more of their paychecks toward retirement costs. Legislators resisted those proposals.
In addition to rejecting selling prisons and shrinking state workers’ pay, the House decided that an additional $200 million in cuts could be made. The Jindal administration disagreed, warning that prisons would close and disaster response would be limited.
From the House, the budget moved to the Senate, where legislators worked with the Jindal administration to do what amounted to digging through the couch cushions in search of cash. They found leftover money in funds that could be plugged into the budget.
A self-insurance fund produced $119 million. Payments by the federal government for past hurricanes generated $55 million. A technology fund resulted in an additional $6.8 million.
Some legislators are concerned about the cuts that were made, arguing that even standstill funding amounts to a reduction because expenses rise year to year.
The budget excludes the standard 2.75 percent boost in state support for public schools at a savings of $79 million. Schools will get more money for increased enrollment.
For the second consecutive year, school systems also are asked to handle costs that the state once helped pay, such as bus transportation for private school students.
“I would have liked to have been able to give K-12 (schools) some money to offset the increase in costs that they’ve had,” said state Rep. Clif Richardson, R-Central.
State Rep. Jack Montoucet, D-Crowley, said he is upset the state stands to lose employees because of budget cuts. He said the public would suffer because fewer people are staffing services.
“I hope it’s not the beginning of the bleeding,” Montoucet said.
Roughly 3,500 positions are scheduled to be eliminated. About 950 of those are filled, said Michael DiResto, spokesman for the Division of Administration.
At the state Department of Health and Hospitals, 325 jobs will be cut, including roughly 45 in the Baton Rouge area, said Lisa Faust, communications director for DHH.
“I think Baton Rouge has to consider the loss of government jobs in this area and the region,” said state Rep. Michael Jackson, D-Baton Rouge. “The loss of jobs anywhere is significant.”
DHH Undersecretary Jerry Phillips said $266 million in cuts will be made to the Medicaid vendor program that helps fund health care for the poor. He said DHH was able to absorb the reductions without cutting rates to health care providers.
“The services are continuing at the current levels,” he said.
Exactly where the cuts were made is unclear. DHH officials attribute the $266 million in reductions to smart money management.
“We have been very judicious in the past few years in our administration of the Medicaid program,” Faust said.
State Sen. Lydia Jackson, D-Shreveport and vice chairwoman of the Senate Finance Committee, said the budget was balanced with $520 million in cuts, $225 million in “efficiencies,” fund sweeps and job eliminations.
She said she is concerned about state agencies being able to achieve the cuts and efficiencies.
Jackson’s prediction: Legislators will be back to make additional cuts.