Budget News and Notes

Written by webmaster on January 24th, 2012

By: Steve Spires

The 2012-13 budget shortfall: $895 million.

That’s what Gov. Bobby Jindal’s administration told the Joint Legislative Committee on the Budget  last Friday when the “continuation budget” was released. The continuation budget represents what it would cost to maintain current levels of government services, and the shortfall—unfortunately—was larger than many were expecting.

The Associated Press broke down what is driving the budget gap. Most significant, and troubling, is that the shortfall is in large part of result of all the “one-time money” the administration used to plug last year’s budget hole:

“At least 40 percent of the gap is tied to the use of one-time money that propped up parts of the current budget and that is expected to fall away in the new fiscal year that begins July 1, most of it used in the state’s Medicaid program. . .

When the governor’s financial architects and lawmakers crafted this year’s budget, they scraped dollars from state funds earmarked for other areas and tapped into one-time available sources of federal cash to balance the spending plans. Most agencies took cuts at the beginning of the fiscal year and then earlier this year when income estimates again fell short of projections. . .

According to the article, around $335 million of the $538 million Medicaid shortfall is due to the use of one-time money. While using this one-time money gave lawmakers a timely election-year reprieve from making health-care cuts, it only served to kick the can down the road another year.

The Medicaid program provides health care to 1.2 million Louisianans, and state cuts to the program would only make the budget situation worse, because they would lead to the loss of federal Medicaid dollars.

To begin to address the shortfall, the Jindal administration can take a number of steps:

To start addressing the hefty state budget gap, Jindal and lawmakers can shave off at least $175 million of the shortfall by refusing to pay for inflationary increases, pay hikes and education funding boosts that they haven’t covered in recent years.

Make no mistake:  despite rhetoric about “doing more with less,” budget cuts have real consequences for vital services like health care and education.

While “inflationary increases” doesn’t sound like a lot, failing to fund them year after year is harmful. For example, the “education funding boosts” mentioned above are for the Minimum Foundation Program (MFP), the state’s primary way of funding K-12 education. Because of budget problems, the MFP hasn’t been increased in three years, despite the fact that the costs of educating a child have increased.

Meanwhile, from the Baton Rouge Advocate comes more evidence that budget cuts have real consequences. After the Jindal administration decided in December to close the mid-year budget shortfall in part through millions in cuts that hit the LSU hospital system, LSU Vice President Fred Cerise sent out notice that lay-offs were in the works.

Yesterday, Cerise announced more cuts:

“An LSU medical clinic that serves about 5,000 Baton Rouge area children is on the chopping block because of Jindal administration budget cuts.

‘We are trying to identify other providers who can absorb the patients,’ LSU System Vice President for Health Care Fred Cerise said Monday. ‘We will do our best to transfer kids to other providers. We are having those conversations right now. We want to make sure they don’t have gaps in care.’

Cerise said LSU has been unable to identify a source of funding that would keep the clinic open because of 2011-12 fiscal year budget cuts.’

Unfortunately, failing to adequately fund education and children’s health care is nothing new for Louisiana. A new survey on children’s well-being ranks Louisiana 48th out of the 50 states in terms of children’s quality of life. The report, by the Foundation for Child Development, only ranks Mississippi and New Mexico lower.

The  report specifically cited Louisiana’s lack of adequate investment in K-12 education and health care as two of the major reasons for the state’s low ranking.

It isn’t hard to connect the dots. Raising the quality of life for Louisianans requires smart public investments in education and health care. Those investments that aren’t being made today because the governor and the legislature would rather rely on one-time money and take a cuts only approach to the budget instead of focusing on building a responsible and sustainable revenue base for Louisiana’s future.

 

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Budget News and Notes

Written by webmaster on January 13th, 2012

While Gov. Bobby Jindal has focused on education, his administration has been conspicuously quiet on another issue that’s sure to grab headlines in the months ahead: the state budget.

But the calendar doesn’t lie. In less than four weeks the governor will lay out his spending plan for 2012-13. And what we have learned so far is not encouraging.

As states across the country begin to rebound from the Great Recession, Louisiana is one of just seven states that experienced a mid-year shortfall in the current fiscal year. And while Louisiana’s $198 million gap was smaller than those in California, Illinois, New York and Washington, it is the second-biggest gap when measured as a percentage of the overall budget.

For fiscal year 2012-13, states across the country have identified a collective $44 billion in budget shortfalls. That’s a major improvement over last year, when states faced $103 billion in shortfalls that had to be fixed through spending cuts or new measures. But next year’s list is incomplete, and Louisiana is among a handful of states that have yet to detail the size of next year’s budget gap (that figure is expected later this month, when the Joint Legislative Committee on the Budget meets).

According to the Center on Budget and Policy Priorities:

“These preliminary totals may be down somewhat from the daunting budget gaps of the last several years, but they are still very large by historical standards. And it is reasonable to expect that this total will grow as governors issue new gap projections along with the budget proposals they will be releasing in the coming months.”

Making matters worse, the latest downturn comes in a year when Congress is unlikely to ride to Louisiana’s rescue, as it has done several times in the recent past. As Stateline.org reported this week, last summer’s deal to raise the federal debt ceiling is likely to trigger automatic, across-the-board cuts in the federal money that states receive for education, social welfare and other programs:

“A long siege of deadlock and dysfunction in Washington has left states frustratingly unclear what to expect from the federal government in the coming year. About the only thing they know for sure is that it is not going to be a year of generosity.”

It’s too early to tell how Gov. Jindal will propose to cope with these challenges. But with the governor having ruled out new revenue measures – and having already raided various pots of one-time money to balance the current-year budget – our fear is that the cuts will come from the health-care and social welfare programs that poor and moderate-income residents depend on.

- On another note, it appears from this Bloomberg story that the state Bond Commission got snookered in 2005 when it overruled the advice of its staff and decided on a risky scheme to borrow money for Superdome upgrades. The cost of financing $187 million worth of repairs has climbed to $42 million and led outside analysts to conclude that the state was “unsophisticated” compared to the Wall Street bankers who sold them on the plan:

“In most cases, the elected political leadership are part- time amateurs,” said Roger Noll, professor emeritus of economics at Stanford University near Palo Alto, California. “They get a noisy political grassroots movement that wants to subsidize a team, and then they get sold a bill of goods.”

Quotable:

“It’s a fallacy to say reductions in Medicaid rates impact the economy,”

- Louisiana Health and Hospitals Secretary Bruce Greenstein, who gets paid $242,001 per year as a state employee, pretending that government spending does not create jobs.

 

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Medicaid Supports Economic Growth, Creates Jobs in Louisiana

Written by webmaster on January 12th, 2012

Louisiana’s Medicaid program is more than a critical source of health care for families, pregnant women, children and people with disabilities. It also plays a key role in creating jobs and building a strong economy, according to a new report by the Louisiana Budget Project.

The report looks at Medicaid’s impact on Louisiana’s economy and is the second of two papers highlighting the program’s vital role in protecting the state’s most vulnerable citizens.

Medicaid pays for 20 percent of all health care in Louisiana, and supports an estimated 57,000 jobs—from doctors, nurses and pharmacists to home-health aides and ambulance drivers. Health care is the largest single source of jobs for the state, employing  286,000 Louisianans in 2010.

“Cutting Medicaid would be terrible policy for Louisiana,” said Louisiana Budget Project Director Jan Moller. “It would harm Louisiana’s most vulnerable citizens and put the brakes on economic growth at the worst possible time.”

Read the full report and press release and for more information on LBP, visit www.labudget.org.

For the latest in budget-related news and updates
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Budget News and Notes

Written by webmaster on January 6th, 2012

A few notable stories before Louisiana heads into a frenzied weekend of football and inauguration activities.

- The U.S. economy added 200,000 jobs in December, capping a year that saw the economy add 1.9 million private-sector jobs – the most since 2005. But the news would have been even better if 280,000 public employees hadn’t been pink-slipped last year. Jared Bernstein says sustaining this growth should be the top goal for policymakers in the months ahead.

-Locally, the Lake Charles American Press reports that the number of Louisiana residents on food stamps has climbed by 44 percent since 2007.

-In North Louisiana, residents are lining up to oppose Boysie Bollinger’s proposal to buy 195 billion gallons of Toledo Bend water at cut-rate prices so he can sell it to Texas.

-The Times-Picayune reports that Gov. Bobby Jindal’s plan to expand school vouchers could be paid for by raiding the Minimum Foundation Program. The details of the governor’s education agenda – which he refused to discuss in detail while seeking re-election this fall – will likely be unveiled at a Jan. 30 education summit hosted by Rep. Steve Carter, R-Baton Rouge, and others.

-Houma Today and other outlets report that Gov. Jindal plans to ignore a panel’s recommendation to cap the size of TOPS scholarships for mediocre students.

 

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Protecting health care from state budget cuts by…cutting hospital budgets?

Written by webmaster on January 4th, 2012

By: Steve Spires

When Gov. Bobby Jindal’s administration presented its mid-year budget cuts to the Joint Legislative Committee on the Budget last month, Commissioner of Administration Paul Rainwater assured lawmakers that neither Medicaid providers nor LSU hospitals were being affected.

Not so fast. Now it appears the LSU public hospitals , which provide critical safety-net care for the state’s poorest residents, will in fact have to cut  $29 million over the next six months, according to a story in the Baton Rouge Advocate.

How did this happen?

In a nutshell:  To help close the $251 million December shortfall, the administration replaced $50 million in state dollars it was planning to spend at the Department of Health & Hospitals with federal dollars through a change in what is called “means of financing.” Legislators were assured that this was simply the result of a smarter use of federal dollars and would protect state health-care services from cuts.

But when something sounds too good to be true, it often is. And in this case, it turns out the LSU public hospitals were counting on using the same federal dollars to pay for their own operations – something legislators weren’t told at the time.

Now the LSU hospitals – including small, rural hospitals that provide critical outpatient care to communities with few health-care options – are starting 2012 by deciding which employees to fire and which services to cut.

More than anything, this latest episode shows the need for new revenues to fund vital safety-net services. Instead of robbing Peter to pay Paul year after year, the state needs a long-term strategy for paying its health-care bills while ensuring that its neediest residents get the care they need. For years, we have been told that state agencies are doing “more with less.”

But the state’s public hospitals will be doing less with less after this latest round of cuts.

Unfortunately, there is little that can be done in the short term. The Legislature is constitutionally barred from considering any revenue measures when it meets this spring, when the Legislature is expected to face another billion-dollar shortfall.

And that means more of a cuts-only approach that harms education and health care.

 

 

 

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