The $895 million shortfall projected for the upcoming budget year shouldn't come as a total surprise to lawmakers or Gov. Bobby Jindal's administration.
At least 40 percent of the gap is tied to the use of one-time money that propped up parts of the current budget and that is expected to fall away in the new fiscal year that begins July 1, most of it used in the state's Medicaid program.
Another slice of next year's shortfall is caused by tuition increases approved by lawmakers and sought by Jindal, that while helping plug some higher education holes, will also increase the cost of the state's free college tuition program.
When the governor's financial architects and lawmakers crafted this year's budget, they scraped dollars from state funds earmarked for other areas and tapped into one-time available sources of federal cash to balance the spending plans. Most agencies took cuts at the beginning of the fiscal year and then earlier this year when income estimates again fell short of projections.
Jindal's budget proposal for the 2012-13 fiscal year is due to lawmakers Feb. 9, and the administration told lawmakers the state is short $895 million next year in state dollars of what it could cost to continue all current services and account for inflationary costs.
That includes a projected $538 million gap in the Medicaid program that cares for the poor, elderly and disabled.
Health and Hospitals Secretary Bruce Greenstein said $335 million of that stems from the use of one-time money in this year's Medicaid spending plans for ongoing services. The department deepened the situation further by pouring more one-time money into the Medicaid program midyear when a new deficit cropped up.
"It's not completely a surprise," Greenstein said Monday of the Medicaid shortfall projection.
He said his office was working with the Jindal administration on strategies to close the gap.
"There will be a combination of new efficiencies, new cost containment measures," Greenstein said. "We're going to use every possible method available to us to make the program even more efficient."
Any cut in state funding to Medicaid also costs the state lost federal dollars, which could worsen budget slashing in the program.
To start addressing the hefty state budget gap, Jindal and lawmakers can shave off at least $175 million of the shortfall by refusing to pay for inflationary increases, pay hikes and education funding boosts that they haven't covered in recent years.
For example, the shortfall includes the expectation that the spending formula for Louisiana's public schools will grow 2.75 percent, once the traditional growth rate, but not funded in recent years. The increase would cost $67 million.
Board of Elementary and Secondary Education President Penny Dastugue said she doesn't think the governor will propose such an increase because of the state's ongoing budget woes. Instead, she expects the formula to continue its current per-student level of funding, which she noted was better than what other agencies have received in rounds of repeated cuts.
"It's going to be highly unlikely the formula would get any increase," Dastugue said Monday. "I don't see it in the cards."
Also, Senate Finance Chairman Jack Donahue said next year's shortfall estimate could drop by up to $300 million or more if agencies continue the cuts they made to close a midyear deficit, rather than trying to restore those services and spending.
"I think the deficit's going to be smaller than $900 million," said Donahue, R-Mandeville. "Exactly what, I can't tell you that I have a feel for that."
