Louisiana lawmakers advance budget using federal aid to avoid major cuts

(The Center Square) – Louisiana legislators took the first step Thursday toward approving a $30-billion-plus state budget that largely matches what Gov. John Bel Edwards’ administration had proposed but with some cuts.

The House Appropriations Committee backed the administration’s intention to spend almost $1 billion in federal CARES Act funding to avoid major spending reductions.

The CARES Act sent $1.8 billion to Louisiana, of which the state will spend 55 percent and distribute the rest to local governments. The money is meant for COVID-19 pandemic relief, not to plug budget holes.

However, the U.S. Department of the Treasury has given state governments wide latitude in determining what counts as a pandemic-related expense, Commissioner of Administration Jay Dardenne said, allowing state officials to use state money to avoid what he called “catastrophic cuts” that otherwise would have to be made when facing a projected billion-dollar revenue shortfall.

“We feel confident we are staying within the guardrails,” he said.

Dardenne said Treasury is allowing states to presume payroll costs for public health and public safety employees since the pandemic began are “substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” State general fund money that otherwise would have been spent to pay those salaries can then be repurposed, he said.

“That’s the swap that’s used throughout the [budget] bill,” Dardenne said.

The plan advanced Thursday closes a $132 million deficit for the current budget year and addresses a projected $904 million shortfall for next fiscal year with relatively minor cuts and a $90 million infusion from the “rainy day” fund. Louisiana’s state constitution requires lawmakers to pass a balanced budget before the fiscal year begins July 1.

The committee did approve a $12 million budget cut to the Department of Health the administration did not request, in part to cover raises for judges approved last year. Louisiana Supreme Court Justice John Weimer later testified the money would be used to plug holes in their general operating budget instead.

Before advancing the budget, the committee tacked on an amendment banning spending on any form of contact tracing that would require mandatory participation by the public. “Contact tracing” refers to the process of trying to track down people who may have been exposed to an infectious disease and asking them to take measures to limit the spread.

Edwards has said participation in Louisiana’s COVID-19 contact tracing program will be voluntary, and Stephen Russo, the health department’s general counsel, said that was still his understanding. But House members said they wanted to make their constituents’ objections to mandatory participation explicit.

The committee also approved using $200 million of the local portion of CARES Act funding to create a fund to help small businesses. Dardenne objected, saying the move would slow down a distribution process that state officials already have launched.

Rep. Jerome Zeringue, who chairs Appropriations, said he would work with the administration to ensure the aid is not delayed.

The current regular session must end by June 1, though a special session may be held in June. Dardenne said he expected a special session in the fall, possibly to deal with a revenue shortfall or decide how to spend another round of federal aid if Congress approves one.


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