After a month of coronavirus business closures and layoffs, the cavalry should start arriving in Louisiana by April 24 with about $1.8 billion in federal aid.
But the federal government doesn’t just shove over a big pile of money and say, ‘spend it wisely.’
The U.S. Department of the Treasury and other federal agencies are hammering out the conditions for how the money can be used.
Their decisions, to be released this week, possibly next, are one of the two critical components necessary for Louisiana to get on with the job of drafting a $32 billion state budget that needs to be signed into law before June 30 or state government comes a screeching halt.
Partisan bickering and inter-chamber squabbling have dropped considerably. But the number of technical hurdles has grown exponentially.
A mere two weeks ago, Louisiana legislators headed to pre-session parties with their biggest fiscal worry being how much of the surplus would …
Most people are focusing on the checks they’ll receive from the $2.2 trillion CARES Act. State budget architects are looking at how a series of federal aid packages influences their calculations for state government spending.
On March 6, federal authorities released $8.3 billion for public health programs. On March 13, President Donald Trump declared a national emergency, which was needed to access $50 billion in disaster relief. On March 18, the Families First Coronavirus Aid Package included funding for testing, paid sick leave and Medicaid, the state-federal health care insurance for low income Americans.
On March 27, the $2.2 trillion CARES Act included $340 billion for programs administered by state governments. The 880-page bill also has sections for rural health care services and includes $13 billion for K-12 schools and $14 billion for higher education, which was not included in the $340 billion but are also major expenses for state governments.
What Louisiana budget drafters are trying to figure out is if the money coming from Washington, D.C., could displace some of the dollars the state already had slotted, thereby freeing money to use elsewhere in the state budget.
The general understanding is that federal money can be used to pay COVID-19 expenses — and not to replace state revenue losses.
Gov. John Bel Edwards said he expects “tremendous flexibility” on the expenditures for which the federal money can be used. For instance, in some spending, the state is required to match, say 25% of the total cost, the federal government’s 75% expenditure. Generally, the source of the state’s match cannot be federal dollars. But the early talks for pandemic relief indicate that provision might be waived for specific programs.
House Appropriations Committee Chairman Jerome "Zee" Zeringue, the Houma Republican responsible for the legislation that will become the state budget, said the fiscal staff is running down all the strings of the federal bills.
The Louisiana Legislature convened for about an hour Tuesday morning to move along new legislation and set up for contingency plans should the…
But there’s a time crunch.
Under the state constitution, the Legislature can convene 60 days during an 85-day calendar period. The session is mandated to adjourn by 6 p.m. June 1. But before leaving, legislators are supposed to approve operating, capital outlay, judiciary and other budgets — about a dozen bills altogether.
If the Legislature doesn't return to work until May 1, then lawmakers theoretically can work 31 days straight to the end of the session or, if a special session is called, for 60 days before the budget expires.
In addition to figuring out how the federal money can be used in the state budget, the Revenue Estimating Conference needs to meet again and determine how much legislators can spend. This crisis started in early March, so the economists won’t have much data, yet, on which to base their projections.
Zeringue remains optimistic that a proper budget can be passed in time.
Just in case, however, House and Senate leaders are developing contingency plans, he said.
One of the plans is for legislators to pass a “standstill” budget for fiscal year 2021, meaning the same levels of spending on the same programs as the FY2020 budget in place now with a few changes to address some price increases and other adjustments necessary to meet the REC revenue projection. Lawmakers would pass the document in time to meet the constitutional deadlines, but with the understanding that come September or October, they would reconvene and realign the document with more accurate fiscal numbers and a better understanding of how the federal money works.
“We have a lot of possibilities right now and not much information,” Zeringue said. What likely will happen is he and the rest of legislative leadership will choose the direction once they see how viable the numbers are when the deadline gets closer.
“You can say, ‘We’re evaluating a lot of alternatives that are all still on the table at this time,'” Zeringue said.