Teachers are lining up for a $ 400 salary increase on a state budget plan that will not contain spending cuts, Governor John Bel Edwards told reporters on Thursday afternoon after the state received federal money for the Medicaid program.
Budget architects have been wondering for months how the pandemic will affect the state’s spending plan for the fiscal year beginning July 1.
At one point, revenue drops were estimated at $ 900 million. Economists were not sure how COVID-19 impacted the state’s economy and feared the worst. Hundreds of millions in federal pandemic aid corrected last year’s budget, but officials remained concerned.
Federal aid and the improvement, although not fully recovered, of tax collection helped. “We are in a better place than many thought possible,” said Edwards.
With about $ 2 billion provided to Louisiana from a federal coronavirus aid project approved in December and the likelihood of another federa …
And thanks to the continuation of a federal Medicaid recalculation, the executive budget proposal from Edwards’ chief financial adviser, Commissioner of Administration Jay Dardenne, will be revealed on Friday morning at the State Capitol, there will be no budget cuts, but there will be more money for teachers and a $ 200 increase for support staff, said Edwards.
The budget proposal by Edwards, a Democrat, begins month-long negotiations with the Republican-led legislature on the state budget. Legislators will work on the basis of the budget proposal presented at the joint hearing of the House and the Senate.
The move is part of an ongoing effort – in which Edwards campaigned – to bring teachers’ salaries up to the southern regional average. Teacher unions are among the Democrats’ biggest supporters.
A huge amount of money the state is receiving from the federal government to finance Medicaid is filling gaps in Edwards’ proposal. The health insurance program for low-income residents and the elderly is mostly paid for by the federal government, with the state kicking a portion. Medicaid accounts for one of the largest parts of the state’s annual spending.
Louisiana will have $ 228 million less to spend on the multi-billion state budget that will be drawn up in the coming months, after a statistic …
During the pandemic, the feds gave Louisiana and all other states a more favorable “correspondence” rate for the Medicaid program by the end of the year, freeing up money to repair holes and make investments.
“This does not mean that we are not challenged by COVID,” said Edwards. The state’s unemployment system is more or less broken, with only $ 6 million in the bank, he said. The state has already borrowed more than $ 130 million from the federal government and will have to borrow more to keep the fund solvent.
He asked Congress to send more aid to state and local governments – something proposed by President Joe Biden, but contested by some lawmakers – to help strengthen the trust fund and prevent corporate taxes from taking effect. This happens automatically when the trust fund falls below a certain level, but Edwards and the Republican-led legislature agreed to postpone those taxes last year.
Louisiana is projected to raise nearly $ 9.6 billion in general state tax dollars for the next financial year, an increase over this year – but not enough to offset all the federal coronavirus aid that Edwards and lawmakers used to gather this year’s budget.
Continuing the federal money that Congress gave states to respond to the coronavirus pandemic will help fill the rest of the hole.
With about $ 2 billion provided to Louisiana from a federal coronavirus aid project approved in December and the likelihood of another federal …
The Joint Legislative Budget Committee will obtain a more complete summary of Edwards’ 2021-22 budget proposal on Friday. Republican leadership in the legislature has generally taken a more conservative approach to finance, expressing a desire to put money into the state’s savings accounts and opting for lower revenue forecasts than the governor wants.
Legislators begin the legislative session in April and are not expected to finish drafting a budget until the final days of the session in June.
Louisiana also has a $ 270 million surplus remaining from the 2019-20 budget year, but lawmakers and the governor cannot use this to pay for ongoing state expenses. According to the Louisiana Constitution, 25% must go to the state’s “rainy days” fund and 10% must pay the retirement debt. This will leave about $ 95 million that can be spent on certain constitutionally permitted single expenses, such as debt payments, coastal restoration work, construction projects or savings.
The Associated Press contributed to this report