Friday, June 21, 2024

Legislators advance ‘standstill’ state budget enhanced by federal pandemic relief

by BIZ Magazine

By David Jacobs | The Center Square

The Louisiana House of Representatives unanimously approved a state spending plan Wednesday, closing a $900 million shortfall with help from federal pandemic aid.

The spending bills now head to the state Senate.

Veteran lawmakers called the approval an “easy vote” compared to some of the fights they’ve had over budgets in past years. But in an unprecedented and unpredictable economic environment, they said, they might have tougher decisions to make next year or even later this year.

“This [federal] money will not be there next year,” Rep. Jerome Zeringue, R-Houma, said.

While the federal CARES Act funding is meant to help pay for the state’s response to COVID-19, not to plug budget holes, regulators allow states to consider payroll costs for public health and public safety employees since the pandemic began “substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” So officials are using federal money to help fund those departments, freeing up state general fund dollars for other areas.

On paper, the proposed operating budget spends more than $34 billion, a $4 billion-plus increase over last year. All spending bills approved Wednesday, including those funding the legislature and judiciary, total nearly $40 billion.

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, called it effectively a “standstill budget.”

“Any sensible person would not send that money back to Washington,” said Rep. Lance Harris, an Alexandria Republican and one of the body’s most outspoken fiscal conservatives.

But Harris implored his colleagues to start thinking about ways to “shrink the size of government” in case the economy doesn’t bounce back quickly enough to sustain the current rate of spending. There is a strong possibility the state will face another revenue shortfall next fiscal year, or even later this year, lawmakers said.

“Based upon the numbers that we’re seeing right now, it looks like there is a probability that there may be a shortfall,” Zeringue said.

There is still the possibility of additional federal aid, though state lawmakers can only guess at how much money might be sent to Louisiana and what strings might be attached.

Rep. Blake Miguez, an Erath Republican, argued lawmakers should support the various tax cuts, incentives and subsidies that many GOP members are backing in hopes of spurring a quicker economic recovery.

Legislators already have approved using CARES Act money to create a $300 million grant fund for small businesses. Gov. John Bel Edwards has not yet announced whether he will sign the bill.

“If we don’t support those initiatives,” Miguez said, “it’ll be a lot rougher.”

But Rep. Tammy Phelps, a Shreveport Democrat, warned lawmakers to be wary of those bills, many of which will decrease state revenue for a promised economic boost that critics say might not materialize.

“Those things do add up,” she said.

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