Fallout over revised budget begins

Hinting at a second special session that may start the day after the ongoing regular session ends, on June 7, Gov. John Bel Edwards made a personal appearance before the House Appropriations Committee last week to reveal his proposed budget changes to address $750 million in less revenue for next fiscal year.
“We’re going to live in the real world,” Edwards told lawmakers.
In what used to be a rare occurrence under previous administrations, but is becoming the norm for this governor, Edwards took questions from the committee about the cuts he said amounted to $792 million in all.
It is now the job of the budget-drafting committee, which has been meeting over the past week, to either approve the revisions to the spending plan that takes effect July 1 or alter them. In his questioning of the governor, Appropriations Chairman Cameron Henry, R-Metairie, attempted to make it clear that it could be the prerogative of the committee to shake up the priorities outlined in the governor’s plan.
Regardless, the governor wants lawmakers to return in a second special session to come up with the revenue, possibly through tax increases, to rectify the cuts.
“We came up short in the (first) special session. We do need additional revenue,” said Edwards, adding that he avoided contingencies, fund sweeps and other financial maneuvers that were commonplace in recent terms. “You’re not going to see gimmicks. We’re not going down that road.”
Many conservatives would still like to see the governor hold off on calling a second special session until late summer or the early fall. Conservatives are hopeful tax collections might pick up in the coming months, or that the revenue bills approved over the past year will bring in more money than anticipated.
Some Democrats are also unhappy about the cuts to hospitals and health care services in the budget bills, inside HB 1, as it stands now with the administration’s revisions. Lawmakers who voted with the governor on tax increases earlier this year were particularly displeased to see cuts to health care services in their districts.
After the long hours his team putting into crafting the proposed budget changes that were announced this week, the governor will certainly not want to hear from the Democrats who are whispering about not even wanting to pass a budget in the regular session when a second special session will be needed to create the revenue needed to fully fund priorities.
One set of votes to cut services in the regular session, followed by another set of votes to possibly raise taxes in a second special session, is not a preferred method of moving forward for many conservatives.
By expanding Medicaid, Edwards said the budget will see $184 million in savings, of which $50 million is being directed to the TOPS scholarship program. Still, even with that infusion, TOPS is still short $183 million of being fully funded. The governor did say he was in favor of proposed legislation to cap TOPS, so that it doesn’t grow alongside tuition and fee increases in the future.
Higher education would suffer a 6 percent cut under the budget changes presented by the administration, while the judicial and legislative branches would be saddled with 10 percent reductions.
Another $70 million is needed to right the budgets of the state’s safety-net hospitals and only five out of the nine have standstill funding.
“It’s not my plan to close any of them,” Edwards said, again urging for more money to be raised in the second special session.
The Edwards administration held a private meeting earlier this month with the operators of Louisiana’s safety net hospitals to begin the arduous task of renegotiating the public-private partnership contracts that the state can no longer afford.
State health care officials have hinted in recent weeks that new contracts could be part of a larger reform effort.
The meeting — attended by Gov. Edwards, DHH Secretary Rebekah Gee, DHH Undersecretary Jeff Reynolds, Commissioner of Administration Jay Dardenne and Chief of Staff Ben Nevers — was described by those in attendance as congenial. Everyone remained in the room throughout the meeting.
The governor asked the hospital operators who among them would be willing to change their contracts. Given that all nine of the hospitals have different needs connected to the $780 million in state and federal funding that’s annually doled out, the providers were just as eager to hear what the administration is interested in changing.
It was likely the first of many meetings, but all involved are under a tight timeline with budget talks just beginning and the fiscal year coming to a close on June 30. That the hospitals also have a 60-day notice walk-out clause in their contracts is only adding to the pressure.
In related news, a tax reform task force that was created in the first special session of the year is currently meeting and it was charged with drawing up a policy agenda for the 2017 regular session. Edwards called upon the task force last week to generate some ideas ahead of the second special session that’s expected.
He said a “down payment” on tax reform is needed to go alongside whatever revenue lawmakers raise in early June. Edwards said he will present lawmakers with a policy roadmap several weeks before the second special session convenes.
They Said It
“There was one guy who could do the loaves and fishes trick and it ain’t me.”
—Gov. John Bel Edwards, explaining budget cuts to the Appropriations Committee
“So you put up a good government bill to be transparent? I can see right through that.”
—Rep. Sam Jones, to Rep. Gary Carter
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