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Louisiana state budget

Louisiana's state legislature sent House Bill 1, a $25 billion state budget for FY2012, to Gov. Bobby Jindal on June 21, 2011. After much back and forth, the final product meets the governor's bottom-line goal of avoiding deep cuts to higher education and health care. ^[1]

Gov. Jindal proposed a $25.5 billion state budget for FY2013, which is $61 million less than the FY2012 budget.^[2]

Louisiana has a total state debt of approximately $63,084,841,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. ^[3]

See also: The Louisiana State Budget on State Budget Solutions

[edit] Fiscal Year 2013 State Budget

Gov. Bobby Jindal unveiled his FY2013 state budget in Feb., 2012, and lawmakers will start work on the FY2013 state budget when they convene in March 2012.^[5]

Legislative Budget

The House passed a budget plan that contains $268 million less in state funding than what was sought by Gov. Bobby Jindal.^[6] The House budget, HB1, can be found here.

The Jindal administration hopes the Senate will restore the funding that the House cut.^[6] As it stands, the House budget cuts on average of nearly 10 percent in the rates doctors and other providers are paid for caring for Medicaid patient.^[6]

The legislative budget relies on $340-plus million in one-time funds, which the Jindal administration supports although conservative Republican lawmakers oppose the use of the funds.^[7]

Governor's Proposed Budget

The governor's proposed budget can be found here.

The governor's proposed $25.5 billion budget is $61 million less than the FY2012 budget, and it closes a nearly $900 million gap with higher retirement costs for state employees, nearly 6,400 job cuts and use of one-time funds.^[2]

Twenty-nine percent of the proposal goes to fund education and an additional 38 percent of the budget is dedicated to health care and social services.^[2]

Pension Reform

The pension provisions found in the governor's FY2013 budget proposal are meant to save the state approximately $450 million and include:^[8]

• increasing employee retirement contributions by 3 percentage points;
• raising the retirement age to 67 for employees younger than 55;
• combining two of the four state pension systems;
• enrolling new hires in a 401(k)-style system instead of giving them traditional pensions.

Officials with the Legislative Fiscal Office said on March 23, 2012, that about $120 million used to balance the state budget comes from plans to increase some state employee's contributions to their pensions and that the governor's budget assumes that the legislature will pass those bills. The Legislative Fiscal Office also noted that the governor's budget assumes another $28.9 million in savings from additional contributions by corrections officers and agents of the Department of Wildlife and Fisheries though both those groups would be excluded from the pension overhaul.^[9]

Funding proposed for the larger departments^[10][11]

The proposal also includes closing one prison and privatizing another, at a savings of $7 million.^[12]

Deficit

The administration told lawmakers the state faces $895 million shortfall in FY2013 of what it could cost to continue all current services and account for inflationary costs. Forty percent of that shortfall stems from the use of one-time money in FY2012 that is expected to fall away in FY2013, and $335 million those funds went to the state's Medicaid program. Also contributing to the shortfall are tuition increases at colleges, that while helping plug some higher education holes, will raise the cost of the state's free college tuition program. The shortfall also includes the expectation that the spending formula for Louisiana's public schools will grow 2.75 %, which would cost $67 million.^[13] Senate Finance Chairman Jack Donahue said next year's shortfall estimate could drop by up to $300 million or more if agencies continue the cuts they made to close a midyear deficit, rather than trying to restore those services and spending.

[edit] Fiscal Year 2012 State Budget

• See past state budgets

House Appropriations Committee Chairman Jim Fannin said in April 2012 that if lawmakers do not agree to use some of the $647 million in the state's rainy day fund to fill the $211 million deficit, it is possible that the legislature could ignore the deficit, and instead wait until the end of the fiscal year on June 30 and then make midyear budget cuts in the 2012-13 fiscal year.^[14]

The $25 billion FY2012 state budget is a compromise between the governor and lawmakers. The budget reduces spending in most state agencies and requires them to absorb inflationary costs. The budget maintains the same level of funding for higher education and K-12 schools as they had in FY2011, meaning that they too must compensate for inflation with their reduced funding.^[15]

One notable difference from prior budgets is that the FY2012 spending plan has no "member amendments," or spending earmarked for specific projects in the districts of influential legislators.^[15] It was said to be the first time in recent memory that there were no such amendments.^[16]

The budget addressed the $2 billion shortfall that State Sen. President Joel Chaisson that the state will face a $2 billion budget shortfall in FY2012. The budget shortfall stemmed from the rising costs of Medicaid coupled with the expiration of federal economic stimulus financing.^[17]

The FY2012 budget can be found here.

On Dec. 16, 2011, the Joint Legislative Committee on the Budget approved $251 million in "budget adjustments" to address a shortfall in the budget. About $43 million of the $251 million budget adjustment was to pump more money into public schools because of an enrollment increase.^[18]

Further cuts may be necessitated by the announcement on April 24, 2012, that officials were cutting $210.5 million from revenue projections for the year.^[19]

Revenue Levels and Cuts

On Dec. 14, 2011, the Legislative Fiscal Office estimated that revenues were nearly $200 million less than what lawmakers had anticipated when crafting the budget. As a result, the governor has 30 days to realign the state budget with the more recent revenue estimates. The governor's plan will also address a shortfall of $42.7 million in the fund the state sends to local school districts.^[20]

State Employment Levels

Gov. Jindal on July 7, 2011, issued an executive order for a FY2012 partial hiring freeze requiring most state agencies to get his approval prior to adding new workers. The $25.3 billion operating budget already cut 3,500 positions, including more than 1,000 planned layoffs. The order would target any jobs in agencies that remain unfilled or that become vacant when someone leaves.^[21] Also, for the second year in a row, state employees will not receive a pay raise.^[15]

[edit] Legislative Proposed Budget

The Senate approved House Bill 1, the $25 billion FY2012 state budget, with a vote of 36-2 on June 19, 2011.^[22] The Senate's version of the budget spends $200 million more than the House supported, but senators said they worked within the spirit of new House restrictions on the use of one-time money for ongoing state programs and services.^[23] It transfer money from various state funds, redirecting federal hurricane-recovery dollars and relies on federal dollars to plug gaps.^[22] For example, Senators moved $30 million from the Office of Group Benefits to balance the budget.^[15] Two days prior to the end of the regular legislative session,^[23] the House approved the budget on June 21, 2011, and sent it to the governor's desk for his signature.^[15] The House also passed companion bills, House Bill 477, which shifts money between various state funds, and House Bill 611, which appropriates money in the current fiscal year.^[15]

The House Appropriations Committee cut $139 million from the FY2012 budget by cutting state workers' salaries, eliminating $44 million in spending on travel and supplies and requiring the state-run Recovery School District to absorb $38 million in insurance premiums. The committee also used $82 million from the state economic development "mega fund" to bring the $24.9 billion state budget back into balance. ^[24] Among other things, the House plan would cut $121 million from the Department of Health and Hospitals, which translates to more than $300 million once federal matching money is included, and also $5.6 million in new cuts to the Office for Citizens with Developmental Disabilities.^[25]

Those changes, and the repeal of state personal and corporate income taxes stripping between $605 million to $943 million in its first year and billions of dollars annually a few years later, upset Gov. Jindal and his staff, leading his financial chief to actually say, "The sky is falling."^[26] The governor said that, should the cuts stand, prisons would close and state troopers would lose their jobs. The cuts amount to less than 2% of the $8.2 billion budget.^[27] The Committee chair warned that more reductions are likely on the House floor to account for a $77 million drop in state revenues recognized in mid-May by a forecasting panel.^[27]

After making those cuts, the Committee approved House Bill 1, the operating budget, and a companion bill, House Bill 477, which shifts money between various funds in the state treasury. ^[28] The House Appropriations Committee also approved House Bill 32, which finances "ancillary" state functions such as prison enterprises and the state's risk management office. An amendment added to the bill restores $10 million in spending and 149 jobs that the administration had planned to eliminate by privatizing a health plan for state workers and retirees. ^[27]

[edit] Governor's Proposed Budget

Gov. Jindal proposed his $24.9 billion budget on March 11, 2011. The budget will be the focus of the legislative session starting April 25, 2011. ^[29]

The budget addresses a shortfall of approximately $1.5 billion by making cuts and "efficiencies" totaling $1 billion in various programs and relying on $474 million in one-time revenue.^[30] It does not reduce funding to public colleges, but relies on tuition increases and other one-time sources of cash.^[31] It also does not reduce funding to private Medicaid providers.^[30]

The plan relies on legislators agreeing to the sale of three state-owned prisons. The sale would give the state $85.7 million that could be used to fund health-care services.^[30]

Under the plan, state workers would pay more toward their pension plans, with their contribution rising from the current 8% to 11%, a move anticipated to save $24 million.^[30]

Cuts

Cuts in the budget include:

• eliminating 4,000 state jobs, although half of those positions are unfilled, meaning 2,000 people would be laid off, saving $96 million^[31]
• cutting community arts programs, which would save $1.5 million^[30]
• LSU charity hospitals' budget, for example, would be reduced by $109 million, almost 12%, although administration officials said the 12% cut for charity hospitals listed in the executive budget is actually 4.5%^[30]

TOPS Program Funding The Taylor Opportunity Program for Scholars (TOPS) provides college tuition at state colleges for Louisiana high school graduates satisfying certain academic criteria. House Speaker Jim Tucker said the governor's proposed budget is structured in a way that doesn't guarantee full financing for the program, but administration officials plan to include language in the budget bill that ensures TOPS will be fully financed no matter what becomes of the constitutional amendment.^[30] A constitutional amendment to be approved by lawmakers and state voters would generate $92 million for the program, with money from a state trust fund that generates money for K-12 education and health care.^[30][32]

Federal Funds The state will lose $938 million in federal funds in FY2012. Although federal economic stimulus financing will dry up in FY2012, new federal dollars are available and being used in the proposed FY2012 state budget, including $400 million in new federal money, mostly intended for health care.^[33]

In August 2010, the administration has asked all state agencies to submit their budget proposals with 35% spending cuts for FY2012.^[34] Although Commissioner of Administration Paul Rainwater said his office had not determined the exact amount of cuts necessary and the directive to draft budgets with 35% less was just an exercise.^[35] Many agency heads said that the budget cuts would be incredibly difficult, particularly given that many agency budgets were reduced by 25% the prior year.^[35] LSU Chancellor Michael Martin saying in an e-mail to faculty and staff that reducing the university's budget by 35% " would be ruinous to LSU for generations."^[35]

[edit] Transparency

• See sample transparency legislation at the Sunshine Standard

Art. 3, Sec. 15(d) of the Louisiana State Constitution provides that each bill must be read by title on three separate days in each house and that there can be no final passage without public hearing and committee report.

See also: Constitutional provisions regarding reading of bills

On November 12th, 2008, Louisiana announced the launch of its spending transparency database, LA Trac.^[36] The database is now up and searchable.

The new government spending database is LaTrac (Louisiana Accountability and Transparency). The database resulted from an executive order by Governor Jindal and the authorization of the legislature. As the Commissioner of Administration, Angele Davis, said, “This is an important event, an extraordinary step forward, and a historic reform initiative for Louisiana and its pursuit of better, more accountable government…Today we begin to empower four million citizen auditors to monitor what the state spends and to judge whether it’s wise, necessary, and achieving results.”^[37]

LaTrac contains all executive branch spending for the state of Louisiana, including higher education. It also has a vendor search and a link to the performance of state agencies (through LaPAS). LaTrac also contains LA eGrants which lists all grants that are available through the state.

Also, the new Taxpayers Union of Louisiana Taxpayers of Louisiana website was formed in the spring of 2008 aided by a "Standing Together" grant from the National Taxpayers Union. Founder, John Roberts, stated his belief that transparency in Louisiana's budget was a boon to the taxpayer and would help curtail much of the unnecessary spending so many in Louisiana have become accustomed to.

[edit] Government Tools

See also: Evaluation of Louisiana state website

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
LaTrac	Y	N	Y	Y	Y	N

[edit] Limitations and Suggestions

Some of the information in LaTrac lacks the specificity some users would like, but every appropriation is listed payable to the entity by name, i.e. Avoyelles Parish School Board. That said, Louisiana is in the process of updating its current software systems, and improvements to LA Trac will continue to be made pending those software upgrades.^[38]

[edit] LaPAS

The Louisiana Performance Accountability System (LaPAS) is electronic database that tracks performance standards, interim quarterly performance targets, and actual performance information for Louisiana's Executive Branch departments and agencies.

Departments and agencies are required to submit quarterly Performance Progress Reports to LaPAS via a web-based application. The Office of Planning and Budget (OPB) in the Division of Administration, as the official record keeper of performance standards and information, maintains LaPAS.

[edit] Fiscal Year 2011 State Budget

The state's FY2011 budget totaled $25.5 billion.^[39] The budget can be found here. Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

The state's FY2011 state budget for the fiscal year starting July 1, 2010, was passed by the Louisiana legislature on the last day of the legislative session after much wrangling.^[40][41] The House approved a budget bill largely written by the Senate and with far fewer cuts than the House wanted. It was passed in part due to pressure from Bobby Jindal.^[42]

[edit] Budget Cuts

The governor instituted mid-year budget cuts of $107 million after the final numbers showed that the state ended the prior fiscal year with a $106.7 million deficit.^[43] Of the $107 million, the governor plans to trim $20.8 from the Department of Health and Hospitals.^[43] The state health department will also lose another $50 million due to higher-than-expected spending in Medicaid. ^[43]The Board of Regents reduced spending by $35 million, including 109 jobs, at public colleges and universities, with most of the cuts being made at the Louisiana State University System.^[44] Also facing reductions: the executive department 's budget will be reduced by $6 million, the Department of Corrections will be trimmed $5 million and the Department of Economic Development will lose $1.91 million.^[43]

The FY2011 budget eliminates nearly 3,000 state jobs, including 1,300 filled positions and also reduced spending in nearly every state department and agency.^[45] Overall spending decreased by almost $5 billion, a reduction of nearly 17%, under the FY2011 budget.^[34]

The state expected to receive around $500 million from Congress, with $375 million of those funds intended for Medicaid.^[34][46] Medicaid provides services to approximately 1.1 million in the state.^[34] Louisiana received almost $147 million in federal funds to retain 2,800 education jobs, mostly kindergarten through 12th grade teachers, according to federal Department of Education estimates.^[46]

[edit] Lawsuit Over Use of Rainy Day Funds

A lawsuit filed Oct. 4, 2010, in [judgepedia:United States District Court for the Middle District of Louisiana|United States District Court for the Middle District of Louisiana], alleges that the state legislature violated the state's Constitution when it passed a law that delays repayment of money taken from the rainy day account until state tax collections rebound to 2008 levels. ^[47] The Rainy Day Fund is official known as the Budget Stabilization Fund.^[47]

If the court finds that the law is unconstitutional, the Legislature would likely have until June 30, 2010, the end of the fiscal year, to rebalance with spending cuts the FY2011 budget that utilized $198 million from the rainy day.^[47] The day after the suit was filed, Gov. Jindal ordered state agencies to prepare for mid-year budget cuts totaling approximately $200 million should a court find the usage of the rainy day funds unconstitutional.^[39] Agencies were already told to plan for 35% budget cuts for FY2012, and will now have to plan for possible cuts this year as they work through scenarios for slashing even more next year.^[39]

[edit] Passage of Budget

After much wrangling in the Louisiana legislature and a letter to House members from Gov. Bobby Jindal urging them to adopt the Senate's budget, the House voted 66-34 to approve House Bill 1, the budget bill, on June 20, 2010, and sent it to the governor.^[48]

The legislature amended an ancillary budget bill passed at the last minute to provide $30 million for "member amendments" that finance pet projects in members' districts, with the money coming from a state fund set aside to pay expenses associated with hurricanes and other emergencies.^[45] Rural legislators were persuaded to vote for the budget with the addition of the member amendments and restoration of cuts to the Louisiana State University Agricultural Center.^[45]

Gov. Jindal told a joint session of the state's House and Senate at the start of the session that Louisiana's fiscal challenges also provided a chance to change the way the state does business. He proposed a mix of one-time funding and cuts to balance the FY2011 budget.^[49] At the start of the session, the House and Senate disagreed regarding how much should be trimmed from the budget and to what extent they should tap state trust funds to fill gaps in the 2010-11 fiscal year that begins July 1.^[49] The governor proposed using an anticipated extension of part of the stimulus law that would generate about $321 million for the state Medicaid program to plug the shortfall.^[50] He said his plan avoids state employee layoffs and furloughs.^[51]

The House presented the budget in House Bill 1 by Rep. Jim Fannin, D-Jonesboro, but the Senate Finance Committee made many changes to the House budget, including restoring 67 million that the House had tried to cut from the state charity hospitals, $50 million for public colleges and a $65 million reduction that would have been made at the discretion of the governor's office.^[52]

To address the $580 million budget shortfall from FY2010, the Senate relied on one-time sources of funds that have been the focus of disagreements with the House, including $242 million from a tax-amnesty program, $198 million from the state's rainy-day fund and $87 million from an emergency response fund.^[52] House leaders say that such reliance on one-time sources in the Senate-crafted budget creates a worsening situation for the coming fiscal year. FY2012 has been called a "cliff year" because the loss of a billion dollars in federal stimulus and Medicaid money and other one-time state revenue will leave a very large hole in the state budget. The $2 billion in one-time funds relied on by the state for FY2011 came from the state's "rainy day" fund, tax amnesty proceeds, a state emergency response fund and other pots of one-time cash.^[53]

The Senate budget was more similar to Jindal's proposed budget than the version of the budget that initially passed in the House.^[52] The Senate's version of the budget cut $70 million more than Jindal proposed from the FY2011 operating budget, including $25 million each for private Medicaid providers^[52], because state revenue projections worsened after the governor released his budget. The House wanted to cut $400 million more instead.^[53] Hospitals and higher education will face the brunt of the steep drop-off in funding.^[53] Gov. Jindal and Senate President Joel Chaisson proposed a series of measures to make it easier to tap into the state's protected funds and thus reducing the severity of cuts that will be needed in FY2011. The House rejected all such proposals, but Jindal said he'll return with similar ideas next year.^[53]

[edit] Budget Background

The Louisiana state budget is prepared every year by October 1st and includes a detailed financial plan for the fiscal year. Prior to the adoption of the budget a series of public hearings are held in both the House of Appropriations Committee and the Senate Finance Committee. A majority vote is required to pass the state budget.The Louisiana fiscal year begins in July.^[54]

Pursuant to law (Louisiana Revised Statute 39:56), the Division of Administration, Office of Planning and Budget prepares the official state budget.^[55]

[edit] Budget figures

2-Year State Budget Comparison^[56]

[edit] Accounting Principles

Main article: Louisiana government accounting principles

The state auditing authority is the Office of the Legislative Auditor, created in 1973. The legislature also created a legislative oversight committee for the auditor. The Legislative Audit Advisory Council serves as an audit resolution council and provides general oversight for operations of the legislative auditor. Steve J. Theriot has been Legislative Auditor since 2004. Louisiana's audit reports are published online.^[57]

The Institute for Truth in Accounting (IFTA) rates Louisana “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Louisiana's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[58] Louisiana's CAFRs are published online by the Louisiana Division of Administration. Angele Davis has been Commissioner of the Louisiana Division of Administration since December of 2007.^[59]

[edit] Credit Rating

In May 2011, Standard & Poor's raised the state's credit rating to AA, in part due to the state's "strong financial management practices" and an unemployment rate that is lower than the rest of the country.^[60]

[edit] Stimulus

Louisiana has received $3.3 billion in federal funding.^[61]

Louisiana expected receive approximately $540 million from the federal government in the summer of 2010 under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[62]

[edit] Public Employees

Main article: Louisiana public employee salaries

Main article: Louisiana public pensions

According to 2008 Census data, the state of Louisiana and local governments in the state employed a total of 314,294 people.^[63] Of those employees, 262,442 were full-time employees receiving a net pay of $890,536,559 and 51,852 were part-time employees paid $44,960,033.^[63] More than 62% of those employees, or 163,332 employees, were in education or higher education.^[63]

[edit] See Also

• Louisiana taxpayer-funded lobbying
• Louisiana public pensions
• Louisiana Legislature
• Louisiana Senate
• Louisiana House of Representatives

[edit] External links

[edit] Additional reading

• Nola.com, Louisiana's growing state payroll strains budget, Feb. 14, 2009

[edit] References

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