BATON ROUGE, La. (AP) — The Louisiana Senate on Friday adopted a more than $35 billion spending plan for the financial year that starts within days, edging the Legislature close to a final budget deal and the end of the special session.
The operating budget that would take effect on July 1 uses hundreds of millions of dollars in stopgap federal coronavirus aid to keep from making deep cuts across state programs and services after Louisiana lost tax collections amid the pandemic.
But agencies would lose $57 million they otherwise would spend on pay raises planned for state workers.
The spending plan, approved in a 38-0 vote, accounts for millions of dollars in tax breaks that lawmakers have backed to help businesses recover from virus-related losses. A final package of tax break bills remains to be passed.
The budget bills return to the House for consideration of Senate changes. It’s unclear whether the House will agree to the Senate rewrite — or require further negotiations behind the scenes. The special session must end by Tuesday.
Senators restored the Edwards administration’s new Medicaid payment plan for hospitals, after threatening to stall the payment model. The changes are estimated to draw down as much as $1 billion or more annually for Louisiana’s hospitals, but lawmakers complained they have received too few details from the state health department about the winners and losers and the method for crafting the new plan.
The payment model still requires federal approval. The Senate budget proposal requires the health department to get another layer of legislative approval, from the joint House and Senate budget committee, before it could use the model if the federal Medicaid agency backs it.
One of the larger Senate debates involved the plan to withhold the $57 million for state worker pay raises.
Those dollars would be steered to a set-aside fund. Lawmakers would determine later in the year if they want to release the money for the salary hikes or if they deem them unaffordable because the virus outbreak has worsened state finances. Gov. John Bel Edwards opposes the idea.
Sen. Karen Carter Peterson, a New Orleans Democrat, sought unsuccessfully to restore the dollars. She said agencies need the money and the cuts are unnecessary, suggesting more federal aid was likely to flow to states to help them recover from the coronavirus outbreak.
“Somebody wanted to press pause. I’m not supportive of pressing pause,” she said.
Sen. Cameron Henry, a Metairie Republican, said the budget already is filled with significant sums of patchwork financing to pay for ongoing agency expenses. He said it was unclear if Louisiana will be able to afford the raises — and he said it sends the wrong message to others struggling with job losses because of the virus.
He said if the economy appears to be rebounding during the budget year, the money could be released for raises.
“I think that was a more prudent step,” Henry said. “We’re just putting it out to the side.”
Only six senators voted to restore the money, while 31 senators rejected the move.
Senators also have added language to their agencies’ budget barring pay raises to legislative employees.
The 2020-21 spending plan would keep most programs and services from cuts by plugging gaps with about $800 million in temporary federal dollars that Louisiana is receiving to respond to the COVID-19 disease caused by the coronavirus. The budget also relies on $90 million from the state’s “rainy day” fund to fill shortfalls.
When the federal aid and rainy day money disappears a year later, deep budget gaps would reappear if the state’s tax collections don’t rebound.
When the budget debate started months ago, Edwards and many lawmakers sought to increase spending on teacher pay, college campuses and early learning programs. But those increases were stripped after state tax collections were hammered by coronavirus business closures and an international feud that drove down oil prices.
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