BRADENTON, Fla. - The Louisiana Legislature ended a 10-day special session agreeing on new budget cuts and using reserves to close a $304 million mid-year gap, as the state faces a bigger shortfall in fiscal 2018.
Lawmakers on Wednesday reached a compromise to settle on using $99 million from the Budget Stabilization Fund to blunt the impact of cuts to state agencies.
Gov. John Bel Edwards, a Democrat, commended lawmakers for reaching the deal to fix the mid-year shortage, even though members in the Republican-led House questioned the amount of money to come from the stabilization fund.
Edwards, who had recommended using $119 million from the emergency account, said he was pleased the final number was 83% of what he sought.
"Today, I can say we put together a solution that met my key priorities," he said, adding that those priorities avoided cutting higher education, K-12 education, public safety, corrections, and the Department of Children and Family.
Agencies will find it difficult to shoulder the new cuts with just four months left in the fiscal year, he said.
Lawmakers cut $2 million from the Legislative Auditor's escrow account, reduced payments by 1% to the state's public-private partnership hospitals, and cut the budgets of the governor's office, the Legislature, and other state agencies.
"Obviously, I feel very good about where we wound up," Edwards said. "These cuts still are not painless."
Lawmakers also closed the shortfall by reducing $11.9 million in expenses through "attrition" by cutting money that agencies would use to hire new employees, replace retirees, or fill positions because workers left or were fired.
"I do have some concerns," about the use of attrition, said Edwards, who questioned whether the savings will materialize. He previously said that attrition had been used to help close prior budget shortfalls.
On Thursday, Edwards' staff presented a "balanced" $9.47 billion general fund budget for fiscal 2018 that included automatic reductions due to a $440.5 million shortfall in forecasted revenues.
"We start today looking at the challenges we face for the next fiscal year," Jay Dardenne, the governor's budget chief, told the Joint Legislative Committee on the Budget.
Some $4.3 billion of the proposed spending plan goes to constitutionally required payments, such as debt service, supplemental pay for local law enforcement, and revenue sharing with local governments.
Dardenne said the budget was balanced by cutting $184 million from the Department of Health, reducing the all other department budgets by 2%, and taking $120 million in annualized reductions to various agencies – a step certain lawmakers required during the special session to reach a compromise on closing the mid-year gap.
In addition to uncertainty about the impact of front-end reductions on agency budgets, Dardenne also emphasized what is not funded in next year's budget.
The plan for 2018 does not account for inflation, does not provide full funding for the state's popular college scholarship program, does not increase funds for roads, bridges, and infrastructure needs, and includes nothing for deferred maintenance.
The cuts to the Department of Transportation and Development will also result in a $43.2 million shortage of money Louisiana needs as a state match to draw down $216 million in federal funds, Dardenne said.
The DOTD also needs $13.1 billion to address the preservation of existing roads and bridges.
Dardenne said the governor has suggested adding a line item in the budget for deferred maintenance but that's currently not possible because of the revenue shortfall, which also reduces the state's bond capacity.
"I think we are lean as a state, and we are going to continue looking where we can be lean," Dardenne said.
He also reminded legislators that the state faces a "cliff" at the end of fiscal 2018 when more than $1 billion in taxes expire – taxes that were temporarily increased last year to close previous budget gaps.
After the committee presentation, Edwards released a statement saying that his recommended budget for 2018 does not use any one-time money to pay for recurring expenses and it contains no fund sweeps.
Given the reductions required because of the slump in revenues, Edwards said work on structurally reforming state budgeting practices during the regular legislative session will be critical.
Edwards is expected to release a package of proposed reforms based on recommendations of the Task Force on Structural Changes in Budget and Tax Policy prior to the start of the session, which starts April 10 and runs through June 8.