$313M deficit from last year closed; Colleges take $12M cut

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Lawmakers and Gov. John Bel Edwards reached a compromise Thursday to rebalance Louisiana’s state operating budget and close a $313 million deficit, lessening — but not eliminating — a spending cut for public colleges.

Colleges will take a $12 million hit, losing about 1 percent of their state financing, under the plan approved without objection by the Joint Legislative Committee on the Budget.

The size of the higher education cut had been the chief point of disagreement. Edwards earlier had proposed an $18 million cut to campuses. Lawmakers spent the last two days cobbling together a deal with the governor reducing that cut by one-third.
“This represents a bipartisan effort, and I thank you for that,” Edwards’ top budget architect, Commissioner of Administration Jay Dardenne, told lawmakers.

But while the college cuts are lessened for now, deeper reductions are likely only a few months away when the governor and lawmakers must deal with another expected midyear shortfall, a point Dardenne stressed to the committee.

“I have to be honest with you, it’s not getting higher education out of the woods,” he said.

For now, lawmakers were pleased they decreased the slashing to campuses that have taken repeated budget cuts over the last nine years. Rep. Beryl Amedee, R-Gray, called it “progress. That’s a step in the right direction.”

The budget-rebalancing plan uses savings from hiring and spending freezes and reshuffles available dollars to fill the gap. Most statewide elected officials will be spared cuts, as will the transportation, prisons and tourism agencies. Reductions will hit the education, veterans affairs and public safety departments, along with the governor’s executive department.

Nearly half the deficit will be closed by postponing $152 million in payments to health providers that care for Medicaid patients until next year.

Former Gov. Bobby Jindal pushed back a similar Medicaid payment last year, a delay criticized as a gimmick to avoid making tough financial decisions. Edwards and lawmakers had planned to get payments back on track, paying 13 months of Medicaid bills in one year, but that idea has been scrapped.

Nearly all the cuts could have been made by Edwards without needing legislative approval, but the Democratic governor stalled action for a month to work with lawmakers who wanted to limit the higher education cut.

House Appropriations Chairman Cameron Henry, R-Metairie, said the negotiations proved budget solutions can be found “as long as everyone kept talking.”

The deficit is from the financial year that ended June 30, when state income fell below projections, mainly driven by continuing employment declines that are hammering Louisiana’s tax collections.

Another shortfall, projected to be around $300 million, is expected for the current 2016-17 budget year, because tax collections and other sources of state revenue aren’t coming in as expected. Lawmakers won’t close that gap until January or February.

“We’re going to be having very painful, difficult decisions,” Dardenne said.

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