BY MICHELLE MILLHOLLON
Capitol news bureau
September 23, 2012
Strong corporate tax collections are expected to help generate the extra cash that Gov. Bobby Jindal was banking on to partially resolve a health care funding crisis.
Greg Albrecht, chief economist for the Legislative Fiscal Office, told state officials Thursday that he anticipates $130 million being left over once the final bills are paid for the state budget year that ended June 30.
“The strength was corporate,” Albrecht said during a meeting of the Revenue Estimating Conference.
The conference — a panel of officials that includes LSU economics professor Jim Richardson — decides how much revenue state government can spend.
Legislators craft the budget based on economists’ projections of how much income state government will derive from taxes and other sources. When collections exceed those projections, a surplus materializes.
Richardson cautioned that the surplus estimate is preliminary.
“This is very unofficial. But just to give everyone a peek,” he said before asking Albrecht to preview what the likely surplus will be.
With fewer dollars than expected coming from Washington, D.C., to provide the poor with health care, state government needs an infusion of cash.
The Jindal administration wants to commit at least $94 million to paying health care bills.
However, state Rep. Jim Fannin, D-Jonesboro and House Appropriations Committee chairman, said the entire $130 million needs to go into the state’s rainy day fund.
“My position is we don’t have any (surplus),” Fannin said. “We have to pay back the rainy day.”
At issue are competing interests.
The governor needs to resolve an $859 million funding shortage that surfaced in the Medicaid program that provides health care coverage for the poor. However, legislators adopted language before the shortage materialized directing much of any leftover money to the state’s rainy day fund.
Formally called the Budget Stabilization Fund, the account exists to tide the state over during an economic downturn.
The governor maintains that any money recognized after the fiscal year ended is available to help with the health care funding gap. Fannin counters that the governor is ignoring legislators’ desire to sock away a surplus into the rainy day fund.
The shortfall arose after Congress unexpectedly changed the rate the federal government will pay toward the state’s Medicaid program. Federal and state governments share the program’s cost.
Jindal slashed $523 million from the program, but that only took care of part of the funding shortage. The administration still needed to find $94 million in state funding to generate enough federal dollars to erase the rest of the shortfall.
The governor’s solution was to bank on a surplus surfacing, despite language in House Bill 822 directing state Treasurer John Kennedy to deposit the difference between the state’s official revenue forecast and actual collections up to $205 million in the rainy day fund. Jindal signed the legislation into law earlier this summer.
Commissioner of Administration Paul Rainwater, the governor’s chief budget aide, said Thursday that Jindal will ask legislators to commit $94 million of the $130 million surplus to health care.
“We haven’t gotten there,” he said on what the governor wants to do with the rest of the money.