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Jun 2, 2010 9:26 PM by Chris Welty

Senate Backs Bills to Tap Into Trust Funds

BATON ROUGE, La. (AP) - The Louisiana Senate backed a package of
proposals Wednesday that would make it easier to tap into the
state's protected funds, after the Senate president argued the
measures were needed to avoid another round of deep cuts to public
colleges and health care services.
The bills wouldn't give lawmakers or the Jindal administration
relief in constructing the budget for the fiscal year that begins
July 1. But they could offer more flexibility to deal with steep
budget drops a year later, when Louisiana is expected to lose more
than $1 billion in federal stimulus and Medicaid dollars.
"As we tighten our belts as we have to do ... we also must
leverage our existing resources to protect our priorities," said
Senate President Joel Chaisson, D-Destrehan. "Flexibility is key
to tackling these budget challenges."
Despite the backing of Gov. Bobby Jindal, the constitutional
changes face an uncertain future in the House, where leaders have
expressed hesitation at dipping into the funds. The measures would
need two-thirds backing of House members, followed by approval from
voters in the fall election to be enacted.
The proposals would let lawmakers cut more deeply into protected
funds when the state has budget troubles, would allow lawmakers to
use the state's "rainy day" fund when certain federal money
flowing to the state drops and would shift some dollars to health
care that otherwise would go into a trust fund.
Different bills in the package have attracted opposition from
the nonpartisan Public Affairs Research Council, the Louisiana
Association of Business and Industry and the Tea Party of Louisiana
- making passage in the House even more difficult.
Among the most sweeping changes is a bill to rewrite the rules
governing the Budget Stabilization Fund, commonly called the rainy
day fund, to allow use of the dollars for drops in certain federal
money for health and social services, instead of reserving the fund
for drops in state revenue.
The proposal, backed in a 30-7 vote, also would address a
dispute between the House and Senate about how the fund must be
repaid.
Chaisson said the fund is useless as it currently is structured.
"It's an $850 million-plus savings account that we can't use
even though we desperately need it," he said.
Opponents say the rainy day fund wasn't designed to cope with
drops in federal spending, just unexpected dips in state income,
and they argue using the one-time money to plug budget holes in
ongoing programs will only exacerbate shortfalls in later years.
Another proposed constitutional change, approved 36-2, would
increase the Legislature's ability to cut into the state's
protected funds.
More than 60 percent of the state's budget is nondiscretionary,
leaving higher education and health care as the largest areas
vulnerable to budget cuts. Currently, the governor and lawmakers
can dip into dedicated funds by up to 5 percent when the state
faces a budget deficit, with some exceptions.
The bill would boost that to 10 percent for certain funds - but
senators added so many limitations that the authority would be
limited to a small pool of funds.

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