(The Center Square) – The Louisiana Senate Finance Committee approved all of the major state spending bills Wednesday, getting lawmakers one step closer to completing the constitutionally required work they didn’t finish during the pandemic-shortened regular session.
The biggest point of contention was a recently proposed new Medicaid payment model for hospitals that health department officials say would allow the dollars to follow the patients. The model would lead to some hospitals getting less money from the state.
Some legislators are concerned the changes could harm, or even lead to shutting down, of hospitals in their areas. Commissioner of Administration Jay Dardenne said the hospitals losing money would be eligible for funding from other sources.
The federal government is about to change how it funds Medicaid and failing to approve the new plan before the next fiscal year begins would lead to a $100 million cut for hospitals, Dardenne said. But lawmakers objected to having to make a decision quickly and under pressure when they don’t yet fully understand how the model will work.
“The failure to communicate is the biggest problem in the room right now,” Senate President Page Cortez said.
Health department Secretary Courtney Phillips, who has been on the job about two months, said the model still can be tweaked after federal approval and promised to keep lawmakers in the loop. Legislators withheld approval for the plan, though that could change on the Senate floor.
There are still unanswered questions about the state’s $30 billion-plus state budget, which incorporates federal COVID-19 relief money to avoid making deep cuts, Finance Chairman Sen. Bodi White said. Several tax breaks and incentives that could affect next year’s revenue still are pending in the session.
Lawmakers plan to use $37 million in unclaimed property to offset those costs, White said. The money was made available by a deal between Gov. John Bel Edwards and State Treasurer John Schroder that could lead to unclaimed property money being off the table for state spending in future years.
Legislators also want to hold back about $60 million that would pay for “market rate adjustment” raises for state workers. They said it would send the wrong message to give state workers raises when so many private sector workers are unemployed, adding that they would revisit the decision in the fall.
The State Civil Service Commission would have the authority to grant the raises to classified employees, officials said. Sen. Heather Cloud said she hoped they would agree with legislators that raises would be a bad idea right now, given the economic uncertainty, arguing that raises now could lead to layoffs later.
Louisiana's constitution requires lawmakers to pass a balanced budget before the next fiscal year begins July 1.
The spending bills advanced Wednesday close an anticipated $900 million revenue shortfall with help from federal aid. Though the CARES Act funding technically is not intended to fill budget holes, it can be used to pay public health and safety expenses since the pandemic began, meaning general fund dollars that would have gone to those departments can be used for other purposes.
On paper, the proposed operating budget spends more than $34 billion, a $4 billion-plus increase over last year. But lawmakers say the apparent increase is misleading because federal funds are counted twice. Rep. Jerome Zeringue, the Houma Republican who chairs the House Appropriations Committee, says it's effectively a “standstill budget.”