Special session: Cuts vs. rainy-day dollars

Posted on February 16, 2017

Gov. John Bel Edwards and his allies had complained for days that House Republicans had not produced a viable alternative to his budget-rebalancing plan. That changed on Wednesday, when the House Appropriations Committee sent two budget cutting bills to the floor that cut current-year spending well beyond the levels recommended by the governor. Gannett’s Greg Hilburn has the story in The News Star.

In addition to adding higher education, K-12 and prisons to the list of agencies being cut, (Appropriations Chairman Cameron) Henry’s bill deepened Edwards’ proposed cut to the Department of Hospitals by $28 million and restored $4 million the governor had planned to take from Attorney General Jeff Landry. Henry said using less than the maximum available from the Rainy Day Fund provides for more protection later. “We realize our budget problems aren’t going away in this two-week period,” he said. “By using this amount is still leaves us will with about $45 million (to use later).”

There isn’t agreement among Republicans over what plan to pursue. The second proposal passed would not use any of the Budget Stabilization Fund, necessitating even deeper cuts. Times-Picayune’s Julia O’Donoghue explains:

The second plan — brought by Reps. Tony Bacala, R-Prairieville, and Rick Edmonds, R-Baton Rouge — wouldn’t use any rainy day money at all. It would deepen cuts to the Louisiana Department of Health and other state agencies, while protecting higher education and prisons. The proposal would also force the Edwards administration to make an additional $60 million in unspecified cuts, which the legislators backing the bill said could easily be met by eliminating unfilled state government jobs.


State solution to higher health care premiums

While Louisiana legislators argue over how much money from the state’s Rainy-Day fund should be used to patch the mid-year budget hole, their counterparts in Minnesota have tapped their own fund to lower health care premiums. While typically reserved for fiscal emergencies, Minnesota’s sound tax and budget policies allowed policymakers there to tap the fund for what legislators believed was a human emergency. While the Affordable Care Act provides generous subsidies for some 86 percent of people who get plans through the exchanges, Minnesota will help pick up the tab for those who make too much to receive federal assistance. Governing Magazine’s Mattie Quinn reports on the state’s success and lessons learned.

To pay for the 25 percent discount, the state is tapping into its rainy day fund. Rainy day funds are typically reserved for drastic unforeseen circumstances, but Democratic state Rep. Laurie Halverson said “a lot of us felt like this was an emergency for our residents.” While there is “nothing that should stop another state from pursuing something similar,” said Justin Giovannelli, a professor at Georgetown University’s Center on Health Insurance Reforms, “Minnesota appropriated some $300 million, and that’s significant for many states.”


Criminal justice reform and the state budget

The Justice Reinvestment Task Force hosted a town hall Wednesday night, bringing more than 200 citizens together to voice their concerns about Louisiana’s incarceration rate and the need for comprehensive reform. The Advocate’s Emma Discher was there:

Louisiana’s incarceration rate is the highest in the U.S. and double the national average. If Louisiana could match the statistics of the second highest, Oklahoma, then the state could save nearly $90 million a year, said state Supreme Court Deputy General Counsel Alanah Hebert, who moderated the event. Speakers made specific suggestions such as abolishing life sentences without parole for juveniles, removing certain charges from the violent offense list, such as stalking and aggravated flight from an officer, and even eliminating the bail system. Many more spoke of the importance of education and re-entry programs.


Trump health rule would lead to higher out-of-pocket costs

A proposal from President Donald Trump’s administration would lead to higher costs for consumers, according to health policy experts. The proposed rule would reduce premium tax credits, cut the open enrollment period in half, and revise federal standards for minimum service requirements in the popular ‘silver’ benchmark plan. Aviva Aron-Dine and Edwin Park have a full rundown on the Center on Budget and Policy Priorities’ blog..

To be sure, the proposed rule does not require all silver plans to reduce their actuarial values to 66 percent.  Just like today, insurers presumably would offer silver plans with a range of actuarial values within the allowed corridor. But because premium tax credits are based on the second-lowest-cost silver plan on offer, they will generally be based on silver plans that adopt the actuarial values at or near the bottom of the allowable range: 68 percent today, 66 percent under the rule. That’s especially likely to be the case in more competitive markets. As a result, while a stated goal of the rule is to expand consumer choice, it actually would leave many moderate-income consumers with worse choices and less affordable coverage.

And as Lydia Mitts, Elizabeth Hagan and Caitlin Morris of Families USA point out, the administration does not hide the fact that the proposed rule would increase out of pocket costs for families:

The administration even admits in the preamble to the rule that this policy change is a bad deal for consumers. The preamble states:

“In the short run, the impact of this proposed change would be to generate a transfer from consumers to insurers. The proposed change in AV could reduce the value of coverage for consumers, which could lead to more consumers facing increases in out-of-pocket expenses, thus increasing their exposure to financial risks associated with high medical costs.”


Number of the Day

87– percentage of adults who lack a college degree lifted out of poverty by government safety net programs. (Source: Center on Budget and Policy Priorities)


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