Edwards budget proposal uses federal aid to avoid deep cuts
BATON ROUGE, La. (AP) — Gov. John Bel Edwards’ proposal to close a $1 billion budget gap caused by the coronavirus pandemic would avoid deep cuts to health care and education programs by relying on hundreds of millions in federal relief aid and a portion of the state’s “rainy day” fund.
The recommendations would keep Louisiana from making cuts in the budget that ends June 30 and would require only modest reductions in the financial year that begins July 1. The TOPS college tuition program, the K-12 school financing formula and the social services department would be spared cuts entirely, though college campuses and health programs would take hits.
The Edwards administration submitted its reworked budget proposal to legislative leaders Friday night. Commissioner of Administration Jay Dardenne, the Democratic governor’s chief budget adviser, explained the recommendations Saturday in an interview with The Associated Press.
“Relatively speaking, it is not as bad as I think most people would expect,” Dardenne said.
Louisiana’s tax collections are being hammered by widespread unemployment and shuttered businesses from the virus outbreak and a resulting steep dive in oil prices worsened by an international feud.
Under the plan offered by Edwards, Louisiana would use nearly $1.2 billion in federal assistance approved by Congress to respond to the pandemic and about $90 million from the rainy day fund to fill most of the gaps in the state’s $30 billion-plus budget.
The health department would take an $18 million reduction to its state funding, Dardenne said. Public colleges, the corrections department, the juvenile justice agency, the governor’s office and an array of state agencies would see around a 2% cut to their general state financing. The cuts total about $70 million, Dardenne said.
Gone from Edwards’ budget proposal are recommendations to boost spending on teacher pay, K-12 school districts, early childhood learning programs and college campuses.
House Appropriations Chairman Jerome “Zee” Zeringue said he was surprised by how modest the cuts are in the Edwards administration recommendations. The Houma Republican said legislative budget analysts were reviewing the proposal’s details — particularly the use of the federal money.
“We want to make sure that we’re doing our due diligence,” Zeringue said. He added: “We’re encouraged with what they have proposed.”
The Appropriations Committee will craft its version of the spending plans — and determine how much of the Edwards recommendations to use — within a week, Zeringue said. That’s the first step of getting a budget through the House and Senate. The regular legislative session must end June 1, and legislative leaders have questioned whether they’ll complete the budget work by then.
The governor’s proposal to balance this year’s budget and craft next year’s spending plan uses $975 million from the $1.8 billion in direct federal aid Louisiana received from Congress through the CARES Act to respond to COVID-19.
While the federal dollars can’t be used to offset lost state revenue, they can be spent on virus-related expenses.
The administration identified expenses across multiple agencies that Dardenne said meet the criteria, where federal dollars can be used to pay for things that otherwise would require state dollars. By using the federal dollars, that will free up state dollars to spend in other areas, essentially closing holes caused by lost tax revenue.
“The guidelines that have been issued by the U.S. treasury are extremely broad and give us a great deal of latitude ... to reimburse for expenses,” he said.
In addition, states received increased federal Medicaid financing because of the coronavirus. Dardenne said Louisiana’s Medicaid program will save $190 million in state dollars because of the extra federal money, and those state dollars can be reshuffled elsewhere.
The federal aid, however, is a one-time infusion of cash. If the state’s tax collections don’t rebound quickly, budget problems would loom in later years when the federal dollars disappear. State economists have warned that Louisiana’s recovery from the virus and the oil price slump likely will be slow, taking years.
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