The current year budget deficit is $304 million.
Gov. Edwards’ plan includes:
Gov. Edwards’ plan does not include:
What is the Governor’s remaining unilateral authority to make cuts?
The Governor has the authority to unilaterally cut up to 5 percent from the state general fund. He has already exercised part of that authority to close an earlier budget deficit. All that’s left is $179 million in unused unilateral budget cutting authority.
The Joint Legislative Committee on the Budget (JLCB) has the remaining authority to reduce statutory and constitutional dedications by $152M, which is equal to 5% of the total appropriation of that dedication.
If these authorities are combined, it would mean that the Governor along with JLCB could cut a total of $331M from the state general fund and statutory and constitutional dedications.
If the Governor and JLCB cut a total of $331M from the state general fund and statutory and constitutional dedications, and the budget deficit is $304M, why is there a need for a special session?
If the Legislature is not called into special session, these cuts will have a devastating and disproportionate impact on higher education and health care. It would mean a $123 million cut to the Louisiana Department of Health, which would impact the state’s public-private hospital partnerships and home and community-based programs for the developmentally disabled and elderly. The $123 million reduction in state funding would translate into an approximately $400 million cut in health care funding when federal matching dollars are figured in. Higher education would be cut $66 million, resulting in layoffs and campus closures. A special session will allow the body to broaden the base for cuts to include the Legislature and Judiciary, and certain appropriations not allowed by JLCB. It would also allow the public and stakeholder groups to weigh in.
Why should the Rainy Day Fund be used?
The governor’s plan minimizes cuts to higher education, waivers, and partner hospitals and does not cut K-12 education (the per pupil allocation of the MFP), the Department of Corrections or the Department of Children and Family Services by tapping the Rainy Day Fund in the amount of $119.6M. If the Rainy Day Fund is not used, devastating cuts will have to be made in these areas of the state budget. Cuts to these areas would have an impact on direct services to the people of Louisiana and possibly result in the loss of services.
Using the Rainy Day Fund is a temporary fix until we can reform the tax code in the 2017 regular session beginning in April.
Will the Rainy Day Fund be depleted if the Legislature takes $119.6M from the Fund to reduce the FY 17 Deficit?
The Rainy Day Fund has a balance of $360M. If the Legislature uses $119.6M from the Rainy Day Fund to reduce the FY 17 deficit, $241M would remain in the Fund.
How often has the Rainy Day Fund been tapped to reduce the state’s budget deficit?
The Legislature authorized use of the Rainy Day Fund four times under Gov. Bobby Jindal’s administration in the amount of $517.4 million. They include:
|FY 16 - $28,164,341||(Ballot Vote 11/9/15)|
|FY 12 - $204,700,000||(SCR 128 of the 2012 Regular Session)|
|FY 10 - $198,396,069||(SCR 42 of the 2010 Regular Session)|
|FY 10 - $86,177,032||(HCR 236 of the 2009 Regular Session)|
In addition, the Rainy Day Fund was tapped at the beginning of the Governor’s administration in FY 16 in the amount of $128M to address the deficit the Governor inherited from the Jindal Administration.
How much money can be taken from the Rainy Day Fund to reduce the FY 17 deficit?
No more than one-third of the fund balance may be taken from the Rainy Day Fund to address a current fiscal year deficit. This equates to $119.6M that is being proposed by the Governor’s Office.
What is the repayment process for the Rainy Day Fund?
The State is required to make repayments to the Rainy Day Fund.
R.S. 39:95 states that “(3) The greater of twenty-five million dollars from any source, or twenty-five percent of any money designated in the official forecast as nonrecurring as provided in Article VII, Section 10(D)(2) of the Constitution of Louisiana, shall annually be deposited in and credited to the fund.” The Treasury has not yet deposited $25M into the Rainy Day Fund for FY 17.
Starting in FY 19, approximately $24M will be transferred to the Rainy Day Fund from the Deepwater Horizon economic damages agreement.
Departments were asked to hold 5% of their budgets in anticipation of addressing the FY 16 deficit. Can these monies be used to solve our current shortfall?
Most of the money was used to address the deficit for FY 16 and to address the state’s flood response and recovery. We will be using some of the dollars that remain to help address the $304 million FY 17 deficit, however, the 5 percent from Higher Education, the Department of Children and Family Services and the Department of Corrections will not be used.
We have heard that the Division of Administration has found money to solve this year’s budget deficit?
The Division of Administration has not found a secret pot of gold. The expected revenues to be generated from the increase in the cigarette tax during the 2015 Regular Session and 1st Special Session of 2016 exceeded the fiscal estimates projected in the corresponding fiscal notes. The Revenue Estimating Conference has recognized these additional dollars (roughly $44M) as part of its adopted forecast.
When will the special session be held?
The special session will convene at 6:30 p.m. on Monday, February 13, 2017 and conclude by midnight on Wednesday, February 22, 2017.
What will be included in the special session call?
The call will include cuts. We will not seek to raise additional revenue measures as part of the special session. We will propose comprehensive tax reform during the 2017 Regular Session utilizing many of the recommendations from the bi-partisan task force created by Rep. John Schroder.