Senate leaders and members of Gov. John Bel Edwards’ administration are voicing concerns about the state budget proposal that the House passed last week, as the upper chamber begins to tackle the state’s finances for the coming year.
“The budget is still really problematic from our standpoint,” Commissioner of Administration Jay Dardenne said Sunday, adding that the Senate has “a lot of work to do” on the budget that will go into effect July 1.
Senate budget leaders are still processing the nearly $26 billion spending plan that the House approved Friday but have started working to hash out the chamber’s version of spending priorities for the state.
A final version of the budget typically takes shape as the two chambers negotiate their differences in the final days of the session.
Among the red flags raised so far: Senators say they are skeptical of the House’s plan to skim about $100 million off of fees and statutory dedications that enter into a debt fund to free up money for other priorities. They also voiced concerns about areas of the budget that are on the chopping block.
“Some things stick out,” Senate President John Alario, R-Westwego, said.
The House plan to take 3.3 percent of certain fees and dedicated funding for agencies to free up money for the Taylor Opportunity Program for Students, in particular, raised questions.
Alario said he worried that the money, which the House directed in the introduction of the 200-plus page budget document, might not meet state requirements to be considered recurring funding. If deemed one-time money, the funding couldn’t be used to cover annual expenses.
“There may be some trouble viewing it as a recurring money, if it only appears in the preamble,” Alario said.
The Senate’s chief budget analyst, Sherry Phillips-Hymel, echoed that concern — as well as the largely unknown impact on agencies that normally would get that money.
“This is not money that was sitting in the treasury idle,” Hymel said. “It’s the equivalent of almost a fund sweep.”
House Appropriations Chairman Cameron Henry, R-Metairie, said on Friday that he recognized the budget process is far from over.
“I know it’s not in a perfect order that we’d like it to be in,” he said. “We’re all working through this.”
Henry has defended his proposal to take a slice of fees and statutory dedications as a previously untapped money source, as Louisiana faces an estimated $600 million shortfall in the coming year.
Edwards has said he plans to call the Legislature into a second special session when the regular session ends to bring in more revenue — likely through removing or cutting some tax exemptions.
“There’s no good answer. We’re $600 million short right now of what we think is needed to adequately fund government,” Dardenne said.
Henry said he would prefer to avoid a second special session until the state gets a better idea of its financial uptick from the special session held earlier this year.
He had initially presented a budget plan that sought to prioritize full funding for the popular TOPS while paring back funding for the state Department of Health and Hospitals.
The final version of the House budget took about $72 million from TOPS to fund contracts to operate the state’s largely privatized safety net hospitals for the poor.
Hospital operators on Sunday told the Senate Finance Committee that they believe that the proposal still underfunds them by about $150 million. They questioned the Edwards administration’s figures for how much money the state will save through expanding Medicaid under the federal Affordable Care Act.
Under the administration’s figures that calculate Medicaid and better match rates, those contracts are fully funded.
“There are competing interests there,” DHH Undersecretary Jeff Reynolds said. “There needs to be a reconciliation between the state’s point of view and the partners’ point of view, reaching a number that is reasonable and fair to all parties.”
The state is renegotiating the contracts with private hospital partners, he noted.
DHH Secretary Rebekah Gee said that the move to replace hospital funding doesn’t make the agency whole. She said that the House version of the budget would lead to the elimination of some waiver programs, including the Children’s Choice Waiver that provides support to families with children with developmental disabilities and the Adult Day Health Care Waiver that provides services that help people avoid moving to nursing homes.
“We have to, in my view, have a second special session,” Gee said. “The current budget makes me cut 50 percent of restaurant inspections, think about that. That keeps me up at night.”