Negotiations on budget loom

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Uncertain funds worry lawmakers

As the legislative session cranks up Monday, state Rep. Jim Fannin is aware of the political land mines before him as he shepherds the state operating budget through the process.

The so-called “fiscal hawks” — a group made up largely of House Republicans — are back with their bid to revamp the state budget process. This year, they have a package of bills to do so.

Also nipping at Fannin’s heels are legislators unhappy with Gov. Bobby Jindal’s idea of using planned property sales and expected legal settlements to help fund higher education in the $24.7 billion proposed state spending plan for the fiscal year that starts July 1.

“I’ve just got to figure out how to negotiate between the fiscal hawks and the one-time money,” said Fannin, D-Jonesboro. “I’ve got a bigger challenge than I’ve ever had before.”

The state budget funds hospitals, colleges and other public services.

It relies on a mix of state and federal funding.

In the upcoming fiscal year, the state faces a $1.3 billion shortfall in the amount of money needed to keep state government services at their current levels.

The governor is banking on colleges increasing tuition, agreements finalizing on public hospitals, property selling and legal disputes ending to make the numbers work in his proposed budget.

State Rep. Brett Geymann, R-Lake Charles and leader of the fiscal hawks, filed his own state budget in House Bill 432. The legislation mirrors the governor’s budget. Every number is identical.

Geymann said he wants to keep his options open for introducing a different budget solution.

“I’m not suggesting we’re going to introduce our own budget,” he said, adding that the possibility is on the table.

More than two dozen Republicans and two Democrats are aligned with Geymann.

The hawks’ ideas include: changing the timeline for the budget’s movement through the Legislature, making a bigger distinction between what is discretionary and what is not, and clarifying that all money should be officially recognized by the state’s revenue estimating group.

At the same time, Geymann said, they share concerns about so-called contingencies and one-time, or nonrecurring, money.

“It’s not truly balanced and it doesn’t follow the constitution,” he said of the governor’s proposal.

At issue is the governor’s reliance on funding materializing. If those pieces do not fall into place, the state could be forced to scramble for alternative dollars or make cuts.

“In the past we have relied on the rainy day funds that were in the bank to help plug some of the holes. That’s not the best way to handle the budget but at least you know the money is there and you can plug some of the holes in the short term,” said state Rep. Franklin Foil, R-Baton Rouge, usually a supporter of the governor and whose district includes the neighborhood where Jindal grew up.

“But this time a good bit of the one-time money is contingent upon the sale of property, the settlement of lawsuits, and things like that, that may never mature. If that is the case, you’re going to definitely have midyear budget cuts. I see that as a big point of concern,” Foil said.

Jindal’s state budget proposal reduces higher education funding 21 percent to $774 million, down from $983 million in the current year, according to the Board of Regents, the state’s top higher education board. About 63 percent — $489 million — is made up of nonrecurring funds that likely won’t be available in future years, and money from property sales and lawsuit settlements that may or may not materialize.

Should any of those dollars fail to materialize — for instance, the $47 million in projected revenue from property sales — Jindal’s budget proposal dictates that higher education would be cut by the same amount.

Higher education leaders and some legislators are poised to fight against what they’ve called the “speculative” and “risky” funds included in the governor’s budget.

State Rep. John Schroder, a Republican from Covington, has questioned why the governor structured his budget in such a way that all of the one-time and contingency funds are directed at higher education and not spread out across all state agencies.

The Jindal administration’s budget also eliminates total funding for LSU’s operation of seven of 10 public hospitals in its system and provides partial-year funding for another in anticipation of reaching agreements for private sector takeover of their operation. Only one of the agreements has been finalized with less than three months remaining in the budget year.

Legislators continue to ask questions about the deals and what assurances are in place that health care services for the poor and uninsured, as well as medical education programs, won’t be negatively affected. Federal approval of supplemental Medicaid payments that are key to the private hospital deals has not yet been received, raising more questions.

Nearly all of the budget savings come from not having to pay salary and benefits of more than 6,000 employees who will lose their jobs at hospitals in Baton Rouge, New Orleans, Lafayette, Houma, Bogalusa, Lake Charles, Pineville and Monroe. Only three months of funding is in the budget for the Monroe hospital.

Funding is still in the budget for LSU hospitals in Shreveport and Independence.

The state Department of Health and Hospitals is projecting a $107 million Medicaid budget savings from the transfer of hospital operations to the private sector.

The administration earmarks $7.44 billion to pay private and public providers for health care, a slight increase from the current fiscal year’s $7.42 billion.

As chairman of the House Appropriations Committee, Fannin already is hearing the complaints. The committee started combing through the budget weeks ago. The public will get an opportunity to voice its opinion beginning Tuesday.

“We will be working through all the issues me and the other members have. It’s the governor’s budget; but now it becomes our budget, the Legislature’s budget.

“My concerns are many, but I’d rather not get into it all. My job is to find common ground,” Fannin said.

Koran Addo, Mark Ballard
and Marsha Shuler of the
Capitol news bureau
contributed to this report.