Teachers are lining up for a $ 400 pay increase in a state budget plan that will not include cuts, Governor John Bel Edwards told reporters Thursday afternoon, after the state received a windfall of 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 shortages were estimated at more than $ 900 million. Economists were unsure how COVID-19 affected the state’s economy and feared the worst. Hundreds of millions in federal pandemic aid patched last year’s budget, but officials remained concerned.
Federal aid and improvement in tax collection, while not fully recouped, helped. “We are in a better place than many thought possible,” said Edwards.
With an estimated $ 2 billion provided to Louisiana from a federal coronavirus relief bill passed in December and the likelihood of another federa …
And thanks to the continuation of a federal Medicaid recalculation, the executive budget proposal Edwards chief financial advisor, Commissioner of Administration Jay Dardenne, unveiled Friday morning at the State Capitol, will have no cuts, but more money for teachers and a $ 200 increase for support staff, Edwards said.
The budget proposal from Edwards, a Democrat, begins months of negotiations with the Republican-led legislature over the state budget. The legislators are working on the proposed budget that has been submitted to the joint hearing on the budget of the House and the Senate.
The move is part of an ongoing effort – which Edwards campaigned for – to bring teacher salaries to the southern regional average. Teachers’ unions are among the Democrat’s largest donors.
A huge pot of money the state gets from the federal government to fund Medicaid fills gaps in Edwards’s proposal. The health insurance program for lower income and older residents is usually paid for by the federal government, with the state kicking some of it. Medicaid accounts for one of the largest chunks of the state’s annual expenditures.
Louisiana has $ 228 million less to spend in the multi-billion dollar state budget that will be set in the coming months, following a stat …
During the pandemic, the FBI gave Louisiana and every other state a more favorable “match” rate for the Medicaid program through the end of the year, freeing up money to plug gaps and make the investments.
“That doesn’t mean we aren’t being challenged by COVID,” said Edwards. The state’s unemployment system is more or less bankrupt, with only $ 6 million in the bank, he said. The state has already borrowed more than $ 130 million from the federal government and will need to borrow more to keep the fund solvent.
He asked Congress to send more support to state and local governments – something suggested by President Joe Biden but opposed by some lawmakers – to help strengthen the trust fund and prevent corporate taxes. That happens automatically when the trust fund dips below a certain level, but Edwards and the Republican-led legislature agreed to delay those taxes last year.
Louisiana is expected to collect nearly $ 9.6 billion in general state tax dollars for the upcoming financial year, up from this year – but not enough to support all of the federal coronavirus aid that Edwards and lawmakers used to put together this year’s budget , to compensate.
The federal money that Congress has given states to respond to the coronavirus pandemic will fill the rest of the gap.
With an estimated $ 2 billion provided to Louisiana from a federal coronavirus relief bill passed in December and the likelihood of another federa …
The Joint Legislative Committee on the Budget will receive a more complete overview of Edwards’ budget proposal for 2021-22 on Friday. Republican leadership in the legislature has generally taken a more conservative approach to finance, expressing a desire to put money in the state’s savings accounts and opting for lower income forecasts than the governor wants.
Legislators will begin the legislative session in April and are not expected to finish drawing up a budget until the last days of the session in June.
Louisiana also has a $ 270 million surplus from the 2019-2020 budget year, but lawmakers and the governor cannot use that to pay for ongoing state costs. Under the Louisiana Constitution, 25% should go to the state’s “ rainy day ” fund and 10% should pay off the retirement debt. That leaves about $ 95 million that can be spent on certain constitutionally permitted one-time expenses, such as debt payments, coastal restoration work, construction projects, or savings.
The Associated Press contributed to this report