Some legislators worried about funding for TOPS

Republican legislators complained Monday that the governor’s approach to the budget threatens long-term funding for a popular college tuition program.

At issue is $120 million from tobacco companies that the Jindal administration wants to use in next year’s budget for the Taylor Opportunity Program for Students. The money is a one-time infusion that would leave more dollars in the state general fund to pay other expenses, including health care and higher education, during a time in which the state is pressed for cash.

State Reps. Cameron Henry, R-New Orleans; Thomas Carmody, R-Shreveport; and John Schroder, R-Covington, said Gov. Bobby Jindal is just creating a problem for the following year, when the extra tobacco money no longer will exist. They said the governor is putting TOPS on track for a deficit.

“All they’re doing is creating a $120 million budget hole that we’re going to have to fill,” Henry said.

Commissioner of Administration Kristy Nichols, the governor’s top budget aide, said not using the money would mean a 5 percent cut to higher education funding in the budget year that starts July 1. She said the governor wanted to protect what he considers to be critical services.

Nichols said cuts can be made in the following year if the revenue does not materialize to sustain services. “We make decisions every year about what expenditures to fund based on the available revenue,” Nichols said.

In the upcoming fiscal year, state government faced a more than $1 billion shortfall in the money needed to keep services at their current levels.

The governor presented a $24.7 billion proposed budget last month that relies on property sales and other so-called one-time, or nonrecurring, money sources to balance expenses with revenue. The spending plan will be debated in the legislative session that starts in April.

The tobacco money comes from two sources, both stemming from the more than $200 billion that major tobacco companies agreed to pay to states in 1998 to settle lawsuits related to health-care costs.

Louisiana sold 60 percent of the future settlement in 2001 by taking out bonds.

Refinancing those bonds to take advantage of lower interest rates is expected to net the state roughly $85 million in savings, $60 million of which the Jindal administration wants to use to lessen how much in state general fund dollars must be spent on TOPS.

At the same time, the settlement of an argument over compliance that resulted in tobacco companies withholding a portion of the tobacco settlement in an escrow account will produce more dollars. By settling, the state unlocks access to at least $90 million, $60 million of which would be used for TOPS.

The governor plugged the $120 million into the proposed budget, frustrating legislators who oppose the use of one-time money for ongoing expenses such as TOPS.

“I have spoken with a good number of the members of the Legislature, and each senator and representative has expressed concern over how this budget has been cobbled together. The proposal regarding use of tobacco settlement funds is yet another example of just how concerned we should all be,” Carmody said in a prepared statement.

Schroder complained that accounting games are jeopardizing TOPS’ future.

Henry said he is all for saving money on the tobacco bonds.

“Anytime you can finance for a lower interest rate, why not do it. It’s what you do with the savings,” he said.

Henry said he doubts the governor will listen to their concerns.

“I want members to be aware of where the nonrecurring money is and let them know we’re creating a problem,” Henry said.