The threat of hundreds of millions of dollars in budget cuts that could hit in July is causing safety-net hospital operators to prep for clinic closures and college-bound students to consider leaving Louisiana, Gov. John Bel Edwards' chief financial adviser said Tuesday.
"The gun has sounded," Commissioner of Administration Jay Dardenne told the House Appropriations Committee, which opened hearings to chart a spending course for the financial year that begins July 1. "The ball is going to be in motion now on a lot of this."
The recently-ended special session called by Edwards to replace expiring temporary taxes failed to raise any money to close the budget gap, after partisan gridlock in the House stalled tax negotiations. In the just-started regular session, lawmakers can't pass taxes, so they're charged with trying to slash spending to eliminate a shortfall pegged around $692 million.
The managers of Louisiana's charity hospital system that cares for the poor and uninsured have notified the Edwards administration of planned clinic shutdowns if plans to dramatically scale back their financing take hold. The New Orleans hospital manager said it will return the state-owned facility and exit its contract, under proposed cuts.
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Dardenne said the health department is readying paperwork required to eliminate programs for the poor, elderly and disabled. College-bound students, he said, are considering out-of-state schools because their TOPS tuition awards are at risk, and they're being wooed by other Southern schools.
"It's like buzzards flying around Louisiana waiting to swoop in on the carcasses we leave behind," Dardenne said.
Louisiana's official budget gap stands at $994 million. But the federal income tax changes are expected to boost state tax collections by $302 million next year, lessening the shortfall's size.
Higher education and health care programs are the state's largest spending areas — and are least protected from slashing.
Edwards, Senate President John Alario and House Speaker Taylor Barras are working on a plan to finish the regular session in mid-May, to hold another special session on taxes and keep the entire budget gap from being closed with cuts.
The Democratic governor sent a letter Tuesday to the Republican legislative leaders, urging them to pass legislation that sets an early end date for the current session — and to convene "a working group" of lawmakers to develop consensus on tax options.
But Appropriations Chairman Cameron Henry said he'll work to pass a budget in the regular session that makes the required cuts.
House Republican lawmakers, including Henry, have talked of the need to curb state spending, but they haven't presented a detailed plan for cuts. Dardenne challenged them with finding $692 million in reductions "that you're willing to put your name on."
"It's your turn. Cut the budget," Dardenne charged them. "You tell us specifically what you don't want to fund."
Republicans started singling out target areas.
Erath Rep. Blake Miguez proposed stripping $137 million from areas usually shielded from cuts by constitutional protections. Because of the depth of the budget gap, those dollars can be reduced. Dardenne said the governor would oppose that as a one-time fix that shouldn't be used to address ongoing budget problems.
Henry pointed to audits that showed millions in misspent health department money. Baton Rouge Rep. Rick Edmonds asked about agency efforts to control payroll growth. Prairieville Rep. Tony Bacala questioned hospital payments and other health spending.
"You challenged us, and I'm accepting that challenge," Bacala told Dardenne.