Louisiana senators Wednesday unveiled their $33 billion-plus operating budget recommendation, which would prohibit millions in pay raises planned for state workers and account for millions in tax breaks they intend to give businesses.
The Senate Finance Committee advanced its budget proposal for the financial year beginning July 1 to the full Senate for a debate scheduled Friday. While changes still can be made, the spending plan was crafted in broad coordination among Senate leaders and passed the committee with bipartisan backing.
The plan would steer an estimated $60 million in salary hikes that civil service employees were slated to receive under a multiyear salary increase plan, along with raises intended for political appointees, into a set-aside fund.
Lawmakers would determine later in the budget year if they want to release the money for the pay increases—or if the coronavirus pandemic has hammered the state’s finances too much to afford such raises.
Finance Chairman Mack “Bodi” White, a Republican from Central, said pay hikes seemed inappropriate when people around Louisiana have lost their jobs because of the virus outbreak.
“We appreciate so much everything that our state employees do for us, but they haven’t lost a paycheck,” said Sen. Heather Cloud, a Turkey Creek Republican. “It would be really bad to offer up pay raises when families are suffering out there.”
She said if the virus further hammers the state’s tax collections, the decision to withhold raises could help avoid state worker layoffs.
Gov. John Bel Edwards said Wednesday he opposes stalling the pay raises: “I don’t believe that that is necessary or that we should do that at this time.”
The proposal could create bureaucratic problems for agencies. They’d need approval to withhold the raises from the state’s Civil Service Commission, which has constitutional authority over the pay rates. The commission hasn’t agreed to the approach suggested by senators.
Senators also added language to their agencies’ budget barring pay raises to legislative employees.
The decision to block the raises comes in a special session where lawmakers also are poised to cut taxes for some businesses, through expanded tax credit programs, new incentives and temporary tax reductions.
White said the resolution of a disagreement between the Democratic governor and Republican Treasurer John Schroder over use of the state’s unclaimed property money will inject an extra $37 million or more into the budget that can cover the cost of the tax breaks without forcing deeper cuts in the budget than the House originally proposed.
The spending plan would keep most programs and services from cuts by plugging gaps with more than $500 million in temporary federal dollars that Louisiana, like other states, is receiving to respond to the COVID-19 pandemic. When the federal aid disappears a year later, deep budget gaps would reappear if the state’s tax collections don’t rebound.
The budget also relies on $90 million from the state’s “rainy day” fund to fill shortfalls.
Much of the Senate Finance Committee debate involved the Edwards administration’s new Medicaid payment plan for hospitals.
The new payment model, which still needs federal approval, is estimated to draw down an extra $745 million to $1 billion annually in federal cash for the state’s hospitals. Senators stripped that money from the budget proposal, saying they have received too few details about the complex changes from the administration to agree to the plans.
The full package of budget bills, covering executive, legislative and judicial branch agencies, nears $39 billion. About $19 billion of that is state financing, while the rest comes from the federal government.