Fixing the budget will require new revenue
The recommendations from the transition team advising Gov. John Bel Edwards on fiscal matters (full disclosure: LBP Director Jan Moller was a member) were unveiled late last week and the bottom line could not be more clear: The state cannot cut its way out of its fiscal morass, which means new revenues are needed to help plug a $750 million shortfall in the current-year budget and a $1.9 billion hole in next year’s spending plan. Kevin Litten of Nola.com/The Times-Picayune has more:
In the report released Friday, the committee makes clear it tried to produce recommendations that “spread (tax increases) as evenly as possible among individuals and businesses to ensure that sacrifice is broadly shared.” The committee also said revenue increases should be used “as a last resort,” but acknowledged that it is unlikely that the state can close its structural deficit through spending cuts and efficiencies alone. “Taxpayers need to be aware that the slogan, ‘doing more with less’ only stretches so far and at some point agencies reach the level where, despite their best efforts, the result is they can only ‘do less with less,'” the committee wrote. “Fewer and lower-quality services are the tradeoff for a smaller revenue component to the budget shortfall solution.”
While the transition report is a list of options for the governor to consider, more details are expected this afternoon. The administration has called a 3 p.m. news conference to present details about its budget and tax recommendations, which will be debated in a post-Mardi Gras special session. The AP’s Melinda Deslatte has a preview of what could be in store:
Among the ideas being discussed: sales tax hikes, a state property tax, employee furloughs, tax break removals, a revisiting of the Stelly Plan income tax provisions and cuts to the money sent to local government. Cuts to state agencies are expected, both for the $25 billion budget that ends June 30 and the spending plan being crafted for next year. But tax increases also seem likely. “Most people understand cutting anywhere from $1.5 billion to almost $2 billion out of a state general fund is likely not feasible,” said new House Speaker Taylor Barras, R-New Iberia. “To raise that much in revenue is probably as far off on the horizon. Knowing the basic conservativeness of this body, I think it will be a blending of the two is my best guess,” he said.
Medicaid expansion a “godsend” for workers
The Advocate’s editorial board is encouraged by Gov. John Bel Edwards’ decision to expand Medicaid coverage to an estimated 350,000 low-income Louisiana adults. While the health insurance program is far from perfect, it’s a vast improvement over the status quo.
Our people are our economy. Most people have employer-provided health insurance that can be difficult to afford on middle-class salaries these days. Those working at low-wage jobs contribute and pay taxes, but they can’t do that if they are hobbled with sickness and injuries that they can’t afford to fix. The governor’s expansion under the federal Affordable Care Act takes care of people who realistically can’t afford insurance and typically show up at emergency rooms with dangerous conditions, leading to a larger bill for the insured population, as costs are shifted around. As Edwards said in his inaugural address, we’re already paying for the uninsured population. By expanding Medicaid under the managed care framework put in place by former Gov. Bobby Jindal, there is the best chance that we can avoid some of the unintended consequences of today’s fragmented system.
Obama legacy includes stronger safety net
Despite entrenched opposition from Republicans on Capitol Hill, President Obama has quietly overseen the largest expansion of the federal government’s safety net in more than a half century. The president’s legacy includes not just the Affordable Care Act, which is extending health coverage to tens of millions of previously uninsured Americans, but a vast expansion of federal tax credit programs that boost take-home pay for low-income workers. Noam Levy of the Los Angeles Times has more:
The latest expansions came in the $1.8-trillion budget deal that Congress approved last month, which made permanent hundreds of billions of dollars in tax breaks for low- and moderate-income families and boosted aid for college students. The tax credits have received much less public attention than other social welfare spending, including the Affordable Care Act, but they have become the government’s largest cash-assistance program to fight poverty, with more than 40 million people receiving benefits each year. The assistance was broadened on a temporary basis, mostly in Obama’s first year. Making that expansion permanent will help at least 16 million people, according to estimates from the Center on Budget and Policy Priorities, a left-leaning Washington think tank. that “would rank among the biggest anti-poverty achievements, outside of health reform, in years,” said Robert Greenstein, the center’s executive director.
Nursing home amendment complicates budget
Shreveport professor and Advocate columnist Jeff Sadow writes that a 2014 amendment to the state constitution backed by Louisiana’s powerful nursing home lobby could complicate efforts to get control of Medicaid spending:
That change essentially locked in the Medicaid reimbursement rate for privately operated nursing homes, adjustable upwards by inflation, despite Louisiana’s institutions having among the lowest occupancy rates of the states. Worse, the formula pushed up the rate artificially by including non-Medicaid patients, and it also pays operators more than $15 million annually for empty beds due to overcapacity. Reductions only could occur with two-thirds legislative majorities or in conjunction with cutting other providers — an option the federal government is unlikely to approve. Other providers left most at risk include the major alternative to nursing homes: home- and community-based services, which have borne rate cuts, even as nursing home rates have increased dramatically in recent years. Those reductions translated into fewer hours granted for those clients with coverage and fewer potential Medicaid-eligible clients covered outside of institutions.
Number of the Day
$3 billion – Amount of federal Medicaid financing that Louisiana has missed out on because of then-Gov. Bobby Jindal’s refusal to extend coverage to the working poor (Source: Governor’s executive order)