Louisiana legislators last week passed the largest state budget since hurricanes Katrina and Rita a decade ago, State Treasurer John N. Kennedy said Monday.
The $26 billion total budget for the fiscal year that starts Friday is about $3 billion more than the spending for this fiscal year, Kennedy told the Press Club of Baton Rouge luncheon.
It might not have always looked that way during the past six months of pitched battles with …
The higher spending plan comes with an historic $2.4 billion increase in taxes and fees. Yet that still may not enough to preclude state government from having to take out a loan later this year.
Kennedy attributed a large part of this coming year’s budget to the increased federal contribution to the state from expanding Medicaid, monies which legally must flow through the state operating budget.
But looking at just the money from the state level — what Louisiana taxpayers contribute, along with fees and dedications — next year’s operating uses about $14.08 billion. That’s 31 percent more than the $10.7 billion in state money that was part of the 2010 budget, he said.
“The Legislature decided as a matter of policy last spring to start raising taxes and fees,” Kennedy said. He includes the 2016 legislative session, the last of Gov. Bobby Jindal’s term, along with the 2017 sessions under Gov. John Bel Edwards.
“It’s breathtaking. That is the largest tax increase in Louisiana history,” Kennedy said.
“While I don’t dispute the fact that this is the largest budget, there’s reason for that,” Commissioner of Administration Jay Dardenne responded in an interview later Monday afternoon. The spending plan for next fiscal year — Edwards’ first state budget — is a more honest look at what government is taking in and is spending, he said.
The Edwards administration inherited a budget in January that didn’t have enough money to cover the promises made.
Dardenne said the Jindal administration did things like delaying paying providers of Medicaid services and failing to factor in expected increases in expenses. Next year’s spending plan didn’t sweep into general use the reserve funds that contain money collected for specific purposes. Nor did this budget rely on paying bills that occur year after year with “one-time” money that won’t be available next year, he said.
“The revenue raised during the sessions make up for the fact that we have been relying one-time money and fund sweeps to balance the budget in fairly deceptive manner over the course of the past eight years,” Dardenne said. “This is the most honest candid information that the public has gotten about the state budget.”
Kennedy acknowledges that the accounting gimmicks previously used inflated the size of the budget for year starting July 1. He still faults Edwards for focusing so much efforts on raising revenues rather than cutting spending.
“The bureaucracy bears some responsibility for all this,” Kennedy said. “Every administration will say ‘Hey Legislature tell me what to cut.’” They don’t have that information. The governor has control of the bureaucracy. How about the bureaucracy stepping up the plate and suggesting some cuts.”
Agencies whose money doesn’t come in until later in the year routinely borrow from funds whose money from fees and other sources are levied earlier in the year. The agency must repay the loan by the end of the fiscal year. It’s called interfund borrowing.
But those reserve funds are so depleted that interfund borrowing as a source of ready cash is all but tapped out. The administration is concerned about having enough cash on hand to pay bills when they become due.
“If the revenues come in as they expect, we’ll be OK. But if they don’t,” Kennedy said, the state will have to take out a loan to pay the bills.
Dardenne agreed that a short-term loan this fall is a possibility, but it’s too early to tell.