According to Jon Moller, the Executive Director of the Louisiana Budget Project, the issue going forward right now when the fiscal session begins later this month, is how much money will the legislature raise to fund what has been appropriated by the same legislature during the past (and second special session) that ended last Monday.
Early this morning, Moller and I discussed the tax cuts, the appropriations, what has been funded, what has not been funded. The conversation took place during Bayoubuzz’s daily Facebook and Twitter Live discussion.
Below is the initial transcribed segment of the interview which started roughly at the 1 minute, 10 second mark and ended on the 8-minute mark of the video. Tomorrow, Part 2, in which the Executive Director responds to questions from the audience about whether Louisiana is spending too much or not enough.
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MOLLER: I think they accomplished more than people think you know, first of all, they did pass a budget. The budget got passed and signed into law by Governor Edwards not just the operating budget but the budget for the legislature and the judiciary. They did pass some revenues, not a lot, but about 87 million dollars in revenue. And they agreed to expand the Earned Income Tax Credit which had been something that my organization has been working very hard and talking about for a long time, so they did give some tax relief to the working poor. What they didn't do, and what they couldn't get done at the last minute and what everybody's been talking about all week, is of course they haven't passed enough revenue to fund the things that are in the actual budget that passed.
And so what what we have now is is a governor a budget on governor Edwards desk that protects medicaid, medicaid is fully funded, but everything else in state government in higher education, public safety, money for sheriff's assistant district attorneys, higher education, TOPS scholarships, juvenile justice all the other things are are what we're calling below the line. There's about five hundred and seven million dollars of needs outside of healthcare that is not funded and that's what's next special session is going to be about. If they had gotten six more votes on, on a tax bill, at the minutes before midnight, then we wouldn't be coming in for a third special session but because they were six votes shy of the seventy votes needed to pass a revenue bill, we're gonna have to come in and do this again, but it's gonna be a very focused tight session and there's really just one job left to the legislature to do.
SABLUDOWSKY: So in terms of appropriating basically is there any more action on appropriations?
MOLLER: There is not going to be a budget bill, the call that the governor issued on Friday for the next special session is written in a way that the legislature does not get to pick and choose what they fund out of this five hundred and seven million dollars, it has it's on a pro-rata basis. In other words, if they raise four hundred million dollars out of five hundred and seven then 80% of the unfunded stuff gets funded, but they can't go in there and it's just kind of across the board,03:51 so that means they fund all but twenty percent of the unfunded portion of TOPS, for example, higher education, sheriff's-- everybody would share in those reductions, but they can't go in there and say we're gonna fund TOPS and sheriff's but we're not going to fund food stamps and foster kids.
That's off the table because of the way the call is written. So this is not gonna be and I think it's very important for people to understand that budget discussion is over, the legislature spoke on the budget--this is about raising, how much money do they want to raise to fund the things that are currently unfunded in the budget that are below the line?
SABLUDOWSKY: So theoretically speaking and I know it's not going to happen. but theoretically speaking, let's say the legislature raised seven hundred million dollars, so I mean what would happen with the additional money?
MOLLER: Well it would be the same as any other year when the state runs a surplus, we would presumably have a surplus at some point after this upcoming fiscal year and, it might be recognized mid-year if the money is coming in faster than expected and so the legislature then gets to spend that next spring in a supplemental bill. I don't think nobody on any side of the aisle thinks that they're gonna raise more than five hundred million. They're either gonna raise five hundred and seven million or they're gonna raise some number below that and decide that sheriff's and TOPS and higher education isn't as important as maybe as we think it is.
SABLUDOWSKY: So the reason why I asked that is because his I understood it, we were six hundred fifty million dollars short and that's a standstill budget but you're saying that we raised, that we've appropriated five hundred and three million, so we're one hundred
MOLLER: The governor, the budget deal that was on the table at the at the end of the session, that they couldn't get passed on the last day, was a little bit below what the governor had sought, six hundred and forty eight million dollars is the difference between the forecast for this year and what they have coming in this year and what they have next year, if no extra revenue becomes available. And so they did actually make some cuts. People think that there aren't any cuts but but there's a lot of them.
First of all, agencies have to swallow inflation and there are some reductions particularly on the Medicaid side, so I mean we say that Medicaid is fully funded Medicaid is actually funded a good bit below what the governor had laid out in his original executive budget. And so there's some savings in there that they think they're gonna get from the utilization, they just think there's gonna be less utilization to Medicaid than they had originally projected, that's where most of it's coming from-- some of it is coming on the eligibility side, they're tightening the income requirements for Medicaid and they think there's gonna be some savings there, but so that's how, that the number ended up closer to about five hundred and fifty five hundred and sixty million somewhere in there and again they did raise a little bit of money.
One of the, two of the things they did--there was an income tax bill that deals with credit for taxes paid to other states, that's about thirty four million dollars--that passed on the last day of the session and there's also fifty three million dollars from the BP settlement that had been going to the nursing homes and going to to various trust funds, they freed that money up and that's gonna be going into the general fund. So when you add those up, it's about eighty seven million dollars, most of that is being used in the legislative and judicial budgets to fill those up, so most of that didn't go into the operating budget, but but when you look at the breakdown, it's about five hundred and seven million dollars to fund the part that is in the HB 1 but is below the line.
With others, most of the stuff in state governments above the line and then there's a section of the budget that is only funded if revenues become available. first of all agencies have to swallow inflation and there are some reductions particularly on the Medicaid side so I mean we say that Medicaid is fully funded Medicaid has actually funded a good bit below what the governor had laid out in his original executive budget and so there's some savings in there that they think they're gonna get from the utilization they just think there's gonna be less utilization to Medicaid than they had originally projected that's where most of it's coming from some of it is coming on the eligibility side they're tightening the income requirements for Medicaid and they think there's gonna be some savings there but but so that's how that the number ended up closer to about five hundred and fifty five hundred and sixty million somewhere in there and again they did raise a little bit of money one of the two of the things they did there was an income tax bill that deals with credit for taxes paid to other state that's about thirty four million dollars that passed on the last day of the session and there's also fifty three million dollars from the BP settlement that had been going to the nursing homes and going to to various trust funds they freed that money up and that's gonna be going into the general fund .
So so when you add those up it's about eighty seven million dollars most of that is being used in the legislative and judicial budgets to fill those up so most of that didn't go into the operating budget but but when you look at the breakdown it's about five hundred and seven million dollars to fund the part that is in the HB 1 but is below the line you know with others most of the stuff and state governments above the line and then there's a section of the budget that is only funded if revenues become available. So that is the one and only job for the legislature in this third special session, is to fund the stuff below the line.