House panel rejects governor's budget bill

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A bill containing Gov. John Bel Edward’s budgetary proposals failed, 7-15, to make it out of the House Appropriations Committee Thursday, leaving only two rival bills, both Republican blessed, to receive the chamber’s full attention.
House Bill 3, by Rep. Cameron Henry, R-Metairie, and House Bill 8, a more stringent version of HB3, whose primary sponsors are Reps. Rick Edmonds, R-Baton Rouge, and Tony Bacala, R-Prairieville, are up for full House debate on Friday.
HB3 was identical to the governor’s proposal, House Bill 1, until it was amended earlier this week. The governor called for $185 million in spending cuts and taking $119 million from the Budget Stabilization Fund, the state’s savings account that has been nicknamed the Rainy Day Fund.
Those two figures, or variations of them, would provide what the state requires to erase a $304 million mid-year revenue shortage. The Legislature has until midnight Wednesday to come up with a financial solution.
Republicans on the committee told Rep. Walt Leger, D-New Orleans, who carried the administration’s bill, that since the bills were the same in wording, differing only in numerical amounts, those who sided with the Edwards’ formula could amend the figures during floor debate.
HB3 reduces the amount of withdrawal from the Rainy Day Fund to just below $75 million. Henry’s bill also would cut an additional $28.8 million from the Department of Health, $7.5 million from K-12 education and $6.2 million from higher education, which Leger said could not sustain more reductions.
“In April, we can debate another budget, but last year we passed a budget and it was implemented.” Leger argued. “We promised people we would meet certain obligations.”
HB3 likely will be hit by considerable amending on the House floor.
HB8 takes no money from the Rainy Day Fund, but uses anticipating savings from extending the statewide public-employee hiring freeze currently in effect and diverting those monies to supplement budget cuts.
The committee also passed a resolution, House Concurrent Resolution 1, that would direct the State Treasurer to pull money from constitutional and statutory dedications in order to pay down state debt.
Under the current law, money deposited in the treasury must first flow through the Bond Security and Redemption Fund in order to pay state debt.
HCR1, proposed by House Speaker Taylor Barras, R-New Iberia, would enforce that constitutional and statutory dedications move through the bond security fund which, according to Barras, would allow for approximately $96 million to be allocated for debt service in fiscal year 2017-18.
“It is becoming clearer this is what we need to do,” Barras said, “and not give the [statutory dedications] a pass on paying their portion of the debts.”
Commissioner of Administration Jay Dardenne said the Governor’s Office took great interest in the concept when a similar resolution came before the Legislature in 2016. Ultimately, it was deemed unworkable and could downgrade Louisiana’s credit rating, Dardenne said, a claim Barras and other Republicans disputed.
“If you want to cut statutory dedications, just cut statutory dedications,” Dardenne said. “That’s a clean way to do it that doesn’t involve the Bond Security and Redemption Fund which is the one thing protected in state law that says to creditors, ‘We are going to pay you.’”
But the committee liked Barras’ idea and sent it to the full house for debate on a 21-2 vote