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$30B-plus Louisiana operating budget receives House support

2 months 2 weeks 2 days ago Tuesday, May 26 2020 May 26, 2020 May 26, 2020 4:25 PM May 26, 2020 in News
Source: Associated Press

BATON ROUGE, La. — The Louisiana House on Tuesday backed a $30 billion-plus spending plan for next year that uses federal coronavirus aid to keep programs and services on an even keel despite the pandemic.

The package of budget bills — approved in a quick afternoon of House votes rather than the daylong debate of years past — heads to the Senate for debate with one week remaining in the regular legislative session. Senators don’t expect to complete their work before that deadline. Instead, the Legislature is expected to finish the budget in a special session that starts immediately after the regular session ends Monday.

Lawmakers voted unanimously for the operating budget for the 2020-21 financial year that begins July 1, along with separate measures to allocate dollars to legislative and judicial agencies. In addition, the House agreed to a proposal that would rebalance this year’s budget and close gaps that emerged because of the virus outbreak.

The plans are largely in line with Gov. John Bel Edwards’ recommendations for spending available federal aid, using the state’s “rainy day” fund and avoiding steep slashing to agencies.

Modest cuts would fall on the health department, public college campuses and other departments. The TOPS college tuition program, the K-12 school financing formula, the social services agency and prisons would be spared reductions. Spending increases proposed before the pandemic for teacher pay, colleges and early learning programs have been removed because Louisiana can no longer afford them. Legislative agencies would get more money, as would the judicial branch.

The largest point of financial disagreement between the majority-Republican Legislature and the Democratic governor centers on an $1.8 billion slice of direct federal aid allocated to Louisiana by Congress to respond to COVID-19, the disease caused by the coronavirus.

Nearly $1 billion would be used to rebalance this year’s budget and help craft next year’s spending plans. But Edwards and GOP lawmakers disagree about how to spend the remaining $811 million.

The governor intended to steer that money to local government agencies to help them with their COVID-19 response, though the Edwards administration has acknowledged those agencies likely won’t have enough expenses that meet the federal aid criteria.

Armed with that information, Republican lawmakers are proposing to use $200 million of the money for small business grants — and they’re suggesting a different method for divvying up the $611 million to local government than the program the Edwards administration created. The House is scheduled to take up that bill Thursday.

The coronavirus blew a $1 billion hole in Louisiana’s income projections for next year, along with creating a shortfall in the budget year that ends June 30. The state’s tax collections are being hammered by widespread unemployment and shuttered businesses from the virus outbreak and a resulting steep dive in oil prices.

The budget bills would use nearly $1.2 billion in federal assistance approved by Congress to respond to the pandemic: $991 million from the direct federal payment and $190 million in increased federal Medicaid financing. The state also would tap the rainy day fund for $90 million, using about $45 million less than the full amount available.

The federal aid will fall away a year later, creating a significant budget gap if the economy — and the state’s tax collections — don’t rebound from the virus outbreak.

The full package of budget bills, covering executive, legislative, and judicial branch agencies, tops $35 billion. About $19 billion of that is state financing, while the rest comes from the federal government.

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