The Louisiana House unanimously agreed Wednesday to a $34 billion operating budget for next year that includes hundreds of millions in federal coronavirus aid, with lawmakers cautioning about future financial uncertainties and disagreeing over hospital payments.
The spending plan for the financial year that begins July 1 would keep most programs and services from cuts, by plugging gaps with temporary federal dollars that Louisiana, like other states, is receiving to respond to the COVID-19 disease caused by the coronavirus.
But lawmakers acknowledged they have concerns about what happens a year later, when the temporary federal stopgap aid disappears. If the state’s tax collections don’t rebound from the deep dive caused by the coronavirus, lawmakers would be left considering steep cuts or tax hikes.
Rep. Lance Harris, an Alexandria Republican, defended the use of the federal dollars ahead of the House’s 100-0 vote for the budget.
“Any sensible person would not send that money back to Washington. They would use it to fill the gap,” Harris said. But he also cautioned that House lawmakers “need to get ready for next year” when that money falls away.
The budget, sponsored by Appropriations Chairman Jerome “Zee” Zeringue, a Houma Republican, heads next to the Senate for debate.
Much of the House debate involved Gov. John Bel Edwards’ administration’s new Medicaid payment plan for hospitals. The new payment model, which still needs federal approval, is estimated to draw down an extra $745 million to $1 billion annually in federal cash for the state’s hospitals.
Rep. Rick Edmonds, a Baton Rouge Republican, sought to require approval from the joint House and Senate budget committee before the new payment plan could take effect, if it wins federal backing.
“This is about holding folks accountable,” Edmonds said.
But he drew only 20 votes from conservative Republicans to include that language in the budget, while 80 lawmakers both Republican and Democrat voted against it.
Instead, the spending plan headed to the Senate gives the joint House and Senate budget committee the ability to reject the hospital payment changes within 30 days of federal approval if it chooses. Supporters of the provision said that ensured if lawmakers had a problem, they could raise objections later.
“We’re going to be watching this money,” said Rep. C. Denise Marcelle, a Baton Rouge Democrat who opposed Edmonds’ proposal to require prior approval.
Beyond the hospitals, Louisiana’s child welfare and food stamp agency, K-12 public school financing formula and the TOPS college tuition program would avoid reductions. College campuses, health programs and some other agencies would take some cuts.
The proposal doesn’t account for millions of dollars in business tax breaks being considered in the ongoing special session, however. Additional cuts could have to be made to keep the budget in balance if those tax breaks appear likely to pass.
When the budget debate started months ago, Edwards and many lawmakers sought to increase spending on teacher pay, college campuses and early childhood learning programs. But the coronavirus caused business closures and layoffs, and an international feud drove down oil prices. That hammered state tax collections.
The proposed education spending increases all have been stripped from the budget proposal, and colleges now are recommended for a $22 million cut.
To avoid deeper cuts, the budget uses more than $500 million in federal assistance approved by Congress to respond to the pandemic and about $90 million from the state’s “rainy day” fund to fill most shortfalls.
The full package of budget bills, covering executive, legislative and judicial branch agencies, tops $39 billion. About $19 billion of that is state financing, while the rest comes from the federal government.
