Jindal consider the cuts

Gov. Bobby Jindal said Monday that he wants law-makers to consider budget cuts in the context of a string of shortfalls that will worsen each year for the next three years.
“This isn’t the toughest year. We’ve got bigger challenges ahead of us,” the governor said.
Lawmakers will craft next year’s spending plans in the legislative session that begins next week.
In his $26.7 billion budget recommendation, Jindal proposes hefty cuts to health care services and public colleges to keep the budget balanced and cope with a projected $1.3 billion drop in state general fund revenue next year.
The number-two ranking lawmaker in the House, Rep. Karen Carter Peterson, D-New Orleans, is pushing a cigarette tax increase to raise more than $200 million a year to offset some cuts. Other lawmakers are considering whether to tap into the state’s “rainy day” fund or an economic development fund to lessen budget cuts.
But Jindal told the Press Club of Baton Rouge that he won’t support tax increases to fill gaps. He said he also doesn’t want lawmakers to scour around for temporary income sources to plug holes, because the state’s budget woes only grow deeper through the 2011-12 budget year.
Instead, he said he wants lawmakers and his administration to find ways to shrink government size permanently.
“Our budget challenges are not a one-year problem,” he said.
Though Jindal has argued against using one-time money for ongoing expenses, his budget includes nearly $1 billion in temporary stimulus money for health care, education and other recurring programs.
The governor said he views the stimulus money, which is available for two years, as a way to buy the state time as it makes structural changes in spending, shrinks the number of government workers and cuts inefficient programs and services.
He’s proposing the creation of a commission to review government offices for ways to cut costs, and he’s backing changes to the state government employment agency that could reduce annual pay increases.
Louisiana’s coffers face multiple blows next year: a slowing of the post-Hurricane Katrina recovery growth, the recession, plummeting oil and gas prices, and a slew of tax breaks approved recently by lawmakers that will drain more than $700 million from next year’s revenue.
And the shortfall is expected to worsen the following year.
At his luncheon speech, Jindal referenced all the hits to the state treasury — except the tax cuts, including a large income tax break for middle- and upper-income taxpayers that he supported last year.
Besides the direct loss of revenue, the state faces another money problem. A temporary, post-Katrina income boom will create a huge shortfall in Louisiana’s Medicaid budget in the next few years.
The state and federal government share costs for the health care program for the poor, elderly and disabled. The federal government’s share is based on a state’s per-capita income.
Because Louisiana is a poor state, the federal government traditionally has paid about 70 percent of the state’s Medicaid costs. But recovery dollars pouring into Louisiana after Katrina — including insurance payments and federal grants — have spiked income in Louisiana, and the federal share of Medicaid is slated to shrink to 63 percent in October 2010.
That will leave Louisiana hundreds of millions of dollars short of the funding needed to continue the Medicaid services currently provided.
The Jindal administration has asked the federal government for a waiver, citing the unique hurricane-related circumstances.
On the Net:
Jindal’s budget proposal is filed as House Bill 1 and can be found at www.legis.state.la.us