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Senate President Page Cortez, R-Lafayette, will play a major role in how the state uses $3.2 billion from the $1.9 trillion federal stimulus bill.

One of the key issues hovering over the 2021 regular legislative session is how state leaders plan to use the latest gusher of federal stimulus aid: $3.2 billion that could offset pandemic losses and also benefit a wide range of services.

Behind-the-scenes talks are underway among Gov. John Bel Edwards, Senate President Page Cortez, R-Lafayette, and House Speaker Clay Schexnayder, R-Gonzales, on what to do with the money.

The legislative session starts in a week on April 12.

Edwards said replenishing Louisiana's unemployment trust fund, which shrunk from $1.1 billion last year to nothing amid heavy job losses, is his top priority.

U.S. Rep. Garret Graves, R-Baton Rouge, has asked state leaders to invest at least $1 billion in roads, bridges and other infrastructure, including a new bridge over the Mississippi River in Baton Rouge.

Others want to send dollars to the hard-hit tourism industry in New Orleans and elsewhere, erect high-speed internet to better connect public school students and devote the onetime dollars to projects that will endure.

"You can do something that the next generation says 'This is here because of the COVID money,'" said John Gallagher, executive director of the Louisiana Municipal Association.

Parishes, cities, towns and villages are getting another $1.8 billion from the same $1.9 trillion federal stimulus bill that won Congressional approval in March, including $375 million for New Orleans, $82 million for Baton Rouge and $36 million for Lafayette.

The $3.2 billion for state services is separate from Edwards' proposed $36.6 billion operating budget, and on top of the roughly $900 million in federal dollars the state got last year to grapple with early revenue losses sparked by the coronavirus pandemic.

"It is a very interesting and unprecedented time," Commissioner of Administration Jay Dardenne told the Senate Finance Committee recently.

The latest package includes fewer strings than the earlier rounds of federal aid.

"In theory we could use the money for lost revenue for anything we want," Dardenne said in an interview.

However, state leaders note that, since the money is onetime, they have to avoid spending it on recurring expenses that will eventually force the state to come up with the money on its own or make cuts.

That means officials will not use it to immediately raise teacher pay to the regional average, promise nearly $1 billion to expand early childhood education over the next decade or boost yearly aid to LSU and other schools by huge amounts.

Edwards said the unemployment fund needs fast attention to prevent a big tax hike for employers who pay into it.

"My priority is to replenish the unemployment trust fund," Edwards told reporters last week. "That is going to be a considerable amount of money."

Said Cortez, "We have talked in terms of $400 million for the unemployment trust fund, to get it out of the negative."

The trust fund had hit zero two times – last week and last fall – and weekly benefits are being financed with business taxes, earlier federal aid and state borrowing from the federal government.

Both the governor and Cortez said using some of the money for roads, bridges and other infrastructure is an option.

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"Certainly infrastructure is a priority for a large percentage of the Legislature," said Cortez, former chairman of the Senate Transportation Committee.

Dardenne said mandated state costs for hurricane protection and water and sewer repairs are other possibilities for some of the $3.2 billion.

Senate Finance Committee Chairman Bodi White, R-Central, said onetime dollars could make sense to upgrade roads, bridges and ports, and let the state get the benefit for 20-30 years.

Both White and Cortez said there is also a chance the state will only allocate about half the money this year and the rest next year.

States have until the end of 2024 to direct the funds.

The $1.9 trillion measure, called the American Rescue Plan Act of 2021, is the same source of funding that will provide $2.6 billion to public schools, $599 million for colleges and universities and $773 million for the child care industry.

Jan Moller, executive director of the Louisiana Budget Project, said the state would be better advised to upgrade its access to unemployment assistance rather than "bailing out" the unemployment trust fund.

"The goal should not be to avoid a small additional assessment on businesses," Moller said. "It should be to help people who work in those businesses and no longer have jobs."

Moller's group monitors and reports on public policy and how it affects Louisiana's low- to moderate-income families.

The federal aid is just part of Louisiana's improved financial outlook.

Edwards said last month the panel that sets how much can be spend on state services – called the Revenue Estimating Conference – will likely recognize more money in May for the financial year that begins July 1.

If that happens, the governor said, his priorities will be to boost his planned $400 per year teacher pay raises and more money for early childhood education.

The federal dollars going to state and local governments goes well beyond the losses suffered, officials said.

While local governments in Louisiana are getting $1.8 billion, then Legislative Auditor Daryl Purpera said last September that local governments had suffered up to $860 million in lost sales and property tax revenue over two years because of both the pandemic and Hurricane Laura, which struck southwest Louisiana.

The $167 million earmarked for the city-parish of East Baton Rouge is more than 15% of its projected 2021 budget, according to an analysis by the Baton Rouge Area Chamber.

"While some of this money will help plug deficits from lower tax revenues due to COVID, these dollars far exceed the lost revenue and increased costs associated with the pandemic," BRAC said.

"A lot of these places didn't experience any losses, including sales tax," said Andrew Fitzgerald, senior director of business intelligence and author of the report.

"Everything I have read from Brookings and other places is this is an opportunity to kind of restart the economy that we have not had for decades and won't have again," Fitzgerald said.

   

Email Will Sentell at wsentell@theadvocate.com.