Agencies brace for more cuts

The 2016-17 fiscal year doesn’t start until Friday, but already Gov. John Bel Edwards’ administration is warning state agencies that more budget cuts are on the way. As The Advocate’s Rebekah Allen reports, agencies are being asked to set aside a percentage of their budget allocations as a hedge against  mid-year cuts that could be needed to make up for lower-than-expected tax collections

“It’s not cutting, but we’re asking them to plan on not spending that percentage until we know later in the year if the funds will be freed up,” said Cody Wells, spokesman for the Division of Administration, the budgeting arm of the Governor’s Office. The precaution has been handed down to soften the blow of potential midyear cuts that could come later next fiscal year to rebalance the budget.  … The various state organizations will be notified on either Thursday or Friday , and the percentage they will be asked to withhold largely will depend on what comes out of the Revenue Estimating Conference, the state panel that officially determines how much money the state has available to spend. The projections will be released Thursday.

Does Louisiana need a loan?

Commissioner of Administration Jay Dardenne told the Baton Rouge Press Club Monday that Louisiana may have to take a short-term loan to keep state programs running amid ongoing cash-flow problems. If so, it would be the first time since the oil-bust years of the 1980s that such a move would be necessary, as Nola.com/The Times-Picayune’s Julia O’Donoghue reports:

The state had avoided using loans since the 1980s, mostly by relying on what is called “interfund borrowing”. If tax payments are slow, the state borrows money from its other funds temporarily to help cover basic costs. The money is paid back when tax collections increase. But Louisiana has lost much of its ability to cover expenses through interfund borrowing following years of Gov. Bobby Jindal and the Legislature authorizing “fund sweeps” to support the budget. Many of the approximately 300 state funds — such as those that support boating enforcement, pest removal from farms or crime victim compensation — no longer have large cash reserves. Unlike with interfund borrowing, money taking through “fund sweeps” was never replaced, leaving those funds depleted. If Louisiana has to borrow, it could be done in two ways. The state could issue bonds that would essentially work as a short-term loan. This is what was done in the mid-1980s. But Dardenne said Louisiana may also look at taking out a more conventional loan, essentially from a bank. Given Louisiana’s lowered credit rating, that might be more prudent, according to Dardenne.

Medicaid expansion could improve public safety

Low-income adults in Louisiana will be eligible for Medicaid coverage starting on Friday, and more than 225,000 people have already enrolled. For some of the state’s populations, the benefits of expansion could be historic. The Advocate’s Elizabeth Crisp reports on the ways coverage expansion can benefit Louisiana’s massive prison population.

“We have more opportunity to change and improve mental health services for this population than any other state in the nation,” [Louisiana Health Secretary Dr. Rebekah] Gee said. … The new partnership will mean that inmates who are released with known mental health issues and meet the new Medicaid requirements will get access to needed medication or other treatments. Gee said she’s hopeful that means that, in the long run, Medicaid expansion can have a positive impact on public safety. If people whose issues stem from mental illness and a lack of access to medication or other treatment are counseled to seek Medicaid-backed treatment, perhaps they will be less likely to re-offend, she said.

Constitutional changes on the ballot

It wouldn’t be Election Day in Louisiana without a handful of constitutional amendments for voters to consider.  This year’s batch of six include proposals to give colleges and universities tuition autonomy and to change the state’s corporate tax collection structures. The AP’s Melinda Deslatte breaks it all down:

Higher education leaders have pushed for years for the Louisiana Legislature to relinquish its authority to set tuition rates across college and university campuses. After years of unsuccessful efforts, they finally won support for a measure by Sen. Dan “Blade” Morrish, R-Jennings, to let the state’s four public college system management boards raise their own tuition and fees – if they can persuade voters that they won’t hammer parents and students with repeated cost hikes. Continued rounds of budget cuts that stripped hundreds of millions from campuses finally persuaded lawmakers to back the idea, along a bill that stops payments from the TOPS college tuition program from automatically growing with each new tuition increase.

Number of the day

$1,038,943- Amount of state tax credits given to Horizon Entertainment and Productions that should not have been issued because production expenses were either inflated, did not occur or could not be documented (Source: Office of Inspector General audit)