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Sunday, November 18, 2018



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Governor’s proposal to close budget deficit relies heavily on "rainy day" fund

Governor’s proposal to close budget deficit relies heavily on "rainy day" fund

BATON ROUGE, La. (AP) — Gov. John Bel Edwards' proposal to close Louisiana's $304 million deficit relies heavily on using the state "rainy day" fund, cutting spending in the health department and tapping into millions in available fund balances to fill gaps.

The Democratic governor released his budget-rebalancing plan Monday, the starting point for negotiations with lawmakers ahead of a 10-day special session called by Edwards to begin Feb. 13.

Edwards seeks to shield the K-12 public school financing formula, public colleges, state prisons and Louisiana's child welfare agency from slashing.

He suggests a 2.5 percent cut to the budgets that pay for the state Supreme Court and the Louisiana Legislature. He proposes reductions across a wide array of agencies, such as the Office of Juvenile Justice and state police. Offices led by the attorney general and the insurance commissioner would take reductions.

About $100 million of the plan involves tapping into other available financing — in effect, using fund balances to fill gaps, rather than cuts. Dollars from a drug company settlement, better-than-expected fee collections and other money would be used. Money allocated to the legislative auditor's office to pay for a new office building would instead fill budget holes. The health department would get $44 million in higher-than-anticipated tobacco tax collections.

A large portion of the governor's plan hinges on using more than $119 million from the rainy day fund, which requires support from two-thirds of the House and Senate. The proposal is running into pushback from some lawmakers, mainly Republicans, who say they don't want to raid any more savings accounts to fill budget gaps.

Edwards said in a statement that his administration "sat down with every agency to identify where budget adjustments could be made" while protecting state priorities.

"We have gone line-by-line in the state budget to identify cuts and other state general fund reductions, including identifying funds that could be moved to other areas of the budget," the governor said. "In our view, this is the most responsible approach to solve this shortfall until we can make structural budget changes in the regular session" that begins in April.

Rep. Lance Harris, R-Alexandria, leader of the House Republican delegation, said he needs analysis from House financial staff before he could assess the governor's proposal.

"I want to look at every single option before we use the rainy day fund," Harris said.

Senate Finance Chairman Eric LaFleur, D-Ville Platte, liked Edwards' general approach.

"It's certainly a good starting point for everyone," LaFleur said.

Attorney General Jeff Landry, a Republican who regularly spars with Edwards, said the governor's budget cut proposal would damage his office and "would reduce our ability to bring much needed funds to Louisiana by pursuing legitimate claims on behalf of the state."

"Our pursuit of child predators, fraudulent contractors and corrupt government officials would be significantly harmed," Landry said in a statement.

Beyond the rainy day fund, much of Edwards' plan rests on cutting state financing in the Department of Health by $128 million, though $73 million of that would be offset by using other available fund balances and the tobacco tax money.

Health Department spokesman Bob Johannessen said the remaining $55 million would involve spending cuts. A payment to Medicaid providers for dental care would be delayed one month, to shift nearly $5 million in costs to next year. Private managers of the LSU charity hospitals, clinics and services for the poor would be cut 1 percent. Contracts would be cut, along with overtime, supply purchases and travel spending.

In the parameters he set for the special session, Edwards isn't allowing any talk of tax hikes to close the deficit. But if lawmakers want to propose raising fees to pay for government services, they can do so — though the governor doesn't include any fee increases in his plan.

The deficit opened up when Louisiana's income forecasting panel downgraded state tax collection estimates to account for unemployment that is dragging income, business and sales taxes below expectations.

The $27 billion state operating budget for the financial year that ends June 30 must be rebalanced this month.

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Follow Melinda Deslatte on Twitter at http://twitter.com/melindadeslatte