Inside Report: La. lawmakers moving toward less budget flexibility

It’s a frequent complaint when governors and legislators are confronted with having to make state budget cuts.

Too many areas of the budget — the spending plan for state government — are off limits, leaving health care and higher education bearing the brunt of the cuts.

The complaint is heard year-after-year as the administration and legislators struggle to balance the budget amid declining state and federal revenues.

Yet, two propositions are winding their way through the legislative process that would provide constitutional protection over even more dollars.

The proposed constitutional amendments have already passed the Louisiana House with far more than the required two-thirds vote. The propositions — sponsored by House Speaker Chuck Kleckley and Speaker Pro Tem Walt Leger III — are one step away from final legislative passage. As constitutional amendments, they would go straight to voters with that Senate vote.

One proposition would set up the Louisiana Hospital Stabilization Fund and provide for special provider assessments, which would be used to attract more federal dollars. The dollars generated would be used to enhance the rates paid hospitals for Medicaid patient care.

Another proposition would insert in the constitution the Louisiana Medical Assistance Trust Fund into which would flow “bed” taxes generated by nursing homes and intermediate-care facilities and other fees from pharmacies. The funds would also be used to pull down more federal Medicaid funds. Separate accounts would be set up within the fund for each of the groups contributing.

The propositions sound innocuous enough from the proposed ballot language that would go before voters. But a lot of details aren’t so innocuous and could grow the budget and more.

Under both propositions, a base reimbursement rate would be set annually for the health-care provider groups. An inflation factor could be applied, also annually, in the case of the hospitals. When it comes to nursing homes and the others, an inflation factor “shall” be applied to the base rates.

State health agency chief Kathy Kliebert testified that the propositions would further restrict the agency’s ability to make budget cuts when they are required.

“It limits our flexibility,” said Kliebert.

Some legislators clearly thought about the implications of the propositions.

“How much are we not going to have a voice in appropriating?” asked state Sen. Ed Murray, D-New Orleans. The answer: about $700 million currently go hospitals; $800 million to nursing homes; $200 million to intermediate-care facilities and another $200 million to pharmacists. Total: $1.9 billion.

The propositions’ potential spillover effect on higher education funding — the other unprotected budget area — prompted legislative questions.

“How does it effect higher ed?” asked state Sen. Dan Claitor, R-Baton Rouge.

“Does this leave higher education out and being the last man standing?” asked state Sen. Brett Alain, R-Jeanerette.

Senate Finance chairman Jack Donahue, R-Mandeville, said higher education is left out “and kind of by itself.”

Public Affairs Research Council President Robert Travis Scott has weighed in, wondering why legislators wanted to give themselves less budget flexibility by making constitutional funding commitments.

“Our big question is, why do you want to do it in the constitution?,” said Scott.

There is a touch of irony in it, given the protestations of too many dedicated and otherwise off-limits places where the budget axe can fall.

Marsha Shuler covers health care policy for The Advocate’s Capitol news bureau. Her email address is mshuler@theadvocate.com.