Budget News and Notes

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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