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Louisiana lawmakers question $60 million in spending from previously frozen funds

March 17, 2018 GMT

As Louisiana legislators grapple with an expected deficit that could fall somewhere between $500 million and $1 billion when the next fiscal year begins, they’re scrutinizing not only proposals for the next budget but also looking at what’s currently being spent in the 2017-18 budget.

During a meeting of the Joint Budget Committee this week, which includes members of both the House and Senate, members looked at a decision by Commissioner of Administration Jay Dardenne to authorize $60 million in spending in this fiscal year that previously had been frozen by a deficit-avoidance plan.

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That spending freeze had been issued by Louisiana’s Revenue Estimating Conference, which keeps an eye on funds coming into state coffers to make sure that budget predictions are coming to pass. The $60 million hold put a pause on legislatively approved actions while the REC waits for more data to come in. When it turned out that revenue projections were holding and there would be no deficit in the 2017-18 budget, that freeze was lifted.

Rep. Cameron Henry, R-Metairie, the chairman of the joint committee, had a few questions about that $60 million. For instance, he wanted to know, given that the upcoming budget looks to have such a giant hole, could that money not have been held over to help bridge the gap in the following year?

Dardenne replied that this would not be possible for two reasons – one, the budget as passed instructed that those funds should be spent if the money was available, and two, even if that money was held back, it would then be considered “excess revenue” to be spent in a supplemental appropriations bill this spring.

He also warned against using the kinds of actions that Henry seemed to be describing to paper over long-term budget issues.

“We think that the wise thing to do, as we’ve all been talking about over the course of the past two years, we want to get away from the practices of the past of using one-time money to balance recurring needs of the state,” Dardenne said.

But Henry clarified that he didn’t see it as a one-time action at all.

“It would only be one-time money if ... you gave them the money back next year,” he said. “If within that list, there’s a cut of $5 million, $10 million to some agency, and we annualize that, we say ‘we’re going to cut you again next year,’ then it wouldn’t be one-time money because that’s just less money you have in your base for next fiscal year. So I don’t want to do one-time money for recurring expenses, either.”

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Among the items held up by the deficit avoidance plan is the previously postponed Acadiana Center for Youth facility in Bunkie. In that case, officials were prepared to continue to hold off on that spending into the new fiscal year, if needed.

“[For] the opening of Acadiana, we withheld that money, but then we also told the agencies that if they did not receive that money for [2019], they should not proceed to spend that money,” said Ternisa Hutchinson, the state’s deputy director of the Office of Planning and Budget.

In the case of higher education funding, because the state schools make monthly withdrawals, education officials had been advised that they might not get their 12th month of funding. But when it became clear that there would be no shortfall, the education system expected that money to be there.

“The truth is we directed you not to hold back that money anymore,” said Rep. Walt Leger, D-New Orleans. “Our appropriation said hold back that money in the event that the revenue doesn’t come in as expected, but if it does, well then this is how the Legislature appropriates these funds for expenditures.”

Henry directed officials to provide a full list of agencies impacted by the $60 million freeze so that his committee could look at that as a starting point for potential cuts in the 2018-19 budget.