Louisiana state budget (2012-2013)

Note: This article was last updated in 2013. Click here for more recent information on state budgets and finances.

Gov. Bobby Jindal signed the $25 billion state budget on June 15, 2012. He vetoed 10 items. After the budget was passed, the governor cut spending by hundreds of millions of dollars to compensate for a drop in federal Medicaid funding after lawmakers went home.

The state General Fund portion of the budget for fiscal year 2013 was $22 million less than the fiscal year 2012 budget, and total state funding included in the budget was $100 million less than the then-current year.

The budget reduced the number of appropriated state government positions by 6,177. It also cut $896,000 in funding for libraries.

Healthcare

The estimated gap in Medicaid financing the state faced in fiscal year 2013 was $859 million.

To close that gap, Gov. Jindal's administration cut $523 million from state health care programs in July 2012, including $329 million from the LSU public hospital system, one-quarter of its entire budget for the fiscal year that began July 1.

Gov. Jindal said he wanted to privatize state services and granted a contract to Blue Cross to handle the PPO policies in the Office of Group Benefits.

Legislative budget

The Senate unanimously passed its $25.6 billion version of the state budget, House Bill 1, on May 31, 2012. The Senate restored more than $300 million in money eliminated by the House, including $268 million in one-time money that was included in the governor's proposed budget. The House and Senate versions were very different.

The House passed a budget plan that contained $268 million less in state funding than what was sought by Gov. Bobby Jindal. The House budget, HB1, can be accessed here (dead link).

The Jindal administration hoped the Senate would restore the funding that the House cut.The House budget cut an average of nearly 10 percent in the rates doctors and other providers are paid for caring for Medicaid patients.

The legislative budget relied on $340-plus million in one-time funds, which the Jindal administration supported although conservative Republican lawmakers opposed the use of the funds.

Governor's proposed budget

The governor's proposed budget can be accessed here.

The governor's proposed $25.5 billion budget was $61 million less than the fiscal year 2012 budget, and it closed a nearly $900 million gap with higher retirement costs for state employees, nearly 6,400 job cuts and use of one-time funds.

Twenty-nine percent of the proposal went to fund education and an additional 38 percent of the budget was dedicated to health care and social services.

Pension reform

The pension provisions found in the governor's fiscal year 2013 budget proposal were meant to save the state approximately $450 million and included:

• Increasing employee retirement contributions by three percentage points;
• Raising the retirement age to 67 for employees younger than 55;
• Combining two of the four state pension systems;
• Enrolling new hires in a 401(k)-style system instead of giving them traditional pensions.

Officials with the Legislative Fiscal Office said on March 23, 2012, that about $120 million used to balance the state budget came from plans to increase some state employee's contributions to their pensions and that the governor's budget assumed that the legislature will pass those bills. The Legislative Fiscal Office also noted that the governor's budget assumed another $28.9 million in savings from additional contributions by corrections officers and agents of the Department of Wildlife and Fisheries though both those groups would be excluded from the pension overhaul.

Funding proposed for the larger departments

Department	Fiscal year 2013 proposed funding	Change from fiscal year 2012
Health and hospitals	$9 billion	$679 million increase
Education	$5.3 billion	$321 million decrease
Executive (includes hurricane recovery agency)	$3.8 billion	$83 million decrease
Higher education	$2.9 billion	$81 million decrease
LSU healthcare services (seven public hospitals)	$825 million	$20 million increase
Children and family services	$783 million	$166 million decrease
Labor	$274 million	$10 million decrease
Natural resources	$198 million	$5 million decrease
Secretary of State	$70 million	$12 decrease
Attorney General	$51 million	$23 million decrease

The proposal also included closing one prison and privatizing another, at a savings of $7 million.

Deficit

The administration told lawmakers the state faced an $895 million shortfall in fiscal year 2013. Forty percent of that shortfall stemmed from the use of one-time money in fiscal year 2012 that was expected to fall away in fiscal year 2013, $335 million of which went to the state's Medicaid program. Also contributing to the shortfall were tuition increases at colleges, which, while helping plug some higher education holes, would raise the cost of the state's free college tuition program. The shortfall also included the expectation that the spending formula for Louisiana's public schools would grow 2.75 percent, which would cost $67 million. Senate Finance Chairman Jack Donahue said the next year's shortfall estimate could drop by up to $300 million or more if agencies continued the cuts they made to close a midyear deficit, rather than trying to restore those services and spending.