Staring at a nearly $1 billion budget hole, Louisiana Gov. John Bel Edwards Monday submitted a spending plan for fiscal 2019 that proposes sweeping cuts to government services.
Under the plan that Edwards said repeatedly he did not prefer, the health care and higher education budgets would bear the brunt of cuts.
Since taking office in January 2016, Edwards, a Democrat, has tussled with the GOP majorities in the legislature who have opposed plans to increase revenue or reform the state tax system.
“You can’t fund what you can’t afford,” Edwards told the Joint Legislative Committee on the Budget at a meeting that was webcast.
Most areas of government would see reductions leaving just a few untouched such as children and family services and the departments of veterans affairs, military affairs and transportation.
Among the budget cuts, Edwards’ proposed eliminating $233.3 million from the general fund for a popular state college scholarship program, leaving it only 20% funded compared to this year.
The state’s public universities would see $25.7 million in reductions.
Debt service for half the amount needed to issue capital outlay bonds in 2019 would be eliminated.
The Acadiana Juvenile Justice Facility, which the state spent $20 million building, would not open – a move that will trim $14 million in expenditures.
“We can’t open it because we don’t have the money to pay for it,” Edwards’ budget chief, Jay Dardenne, said. “So the opening is on hold.”
The largest impact would be felt in the Department of Health where the budget would be cut by $2.4 billion, a portion of which would have come from the federal government under matching programs.
The state, for example, will lose $500 million in federal funds by eliminating $189.5 million in state funds for the disproportionate share hospital program that provides care for the poor.
“This is not the budget we want,” Dardenne said. “This is not the budget the people of Louisiana deserve.”
The general fund budget is based on the revenue estimating conference’s projection that collections in fiscal 2019 will be $8.6 billion, an amount that is $993.6 million less than the current year.
The huge drop in revenue is due to the fact that several temporary taxes will expire June 30, including a 1%t sale tax increase.
The revenue-raising measures put in place two years ago were meant to give the Legislature time to enact tax reform or take other steps to stabilize the budget. That didn’t happen because the conservative Republican House – where budget-related legislation begins - did not move bills Edwards proposed.
Edwards said he would call a special session of the Legislature in February if he and leaders of both chambers reached agreement on avenues to close the deficit before the session.
“You’re not going to pass a budget that makes these kinds of cuts,” he told the committee. “Let’s stabilize this state. We can do that. I’m urging you to sit down with me and figure it out.”
Edwards predicted that absent new revenue, the state likely would see more bond rating downgrades.
The inability of state officials to address the imbalance has led rating agencies to downgrade the state’s general obligation bond ratings by one notch.
S&P Global Ratings lowered the state's GOs to AA-minus from AA in March 2017, and maintained a negative outlook.
Fitch Ratings downgraded the state to AA-minus from AA, and maintained a stable outlook in 2016, while Moody's Investors Service cut its GO ratings to Aa3 from Aa2, and assigned a negative outlook.