SADOW: How To Keep Those Cuts From Happening

Another round of mid-year budget cuts must be endured by Louisiana, but more interesting than its causes and dealing with those solutions chosen is the reaction of one policy-maker in particular.

Given the overwhelming number of protections placed upon most spending in the state, the brunt of these reductions must fall on the two large areas of state government that rely for much of their funding on the state’s general fund, health care and higher education. The latter essentially was spared, by eliminating some unfilled jobs and by factoring increased, and higher-than-expected aggregate collected, tuition. Thus, health care took most of it, in ways to displease a number of policy-makers.

Those presumed concerned over the use of nonrecurring revenues for recurring purposes should note a lawsuit settlement was included in making up part of the $166 million the state was forecast to be short at the regular Revenue Estimating Conference meeting, plus the deficit in the Minimum Foundation Program because of increased school enrollments. Medical providers took another small haircut in reimbursement rates, but after several of these they do add up and may force cost-shifting or retrenchment of services. Some Medicaid optional programs that provided small savings will be terminated.

Legislators who reviewed the cuts seemed most concerned over the halting of Medicaid in-home hospice provision on Feb. 1 of next year, which only makes up a small portion of the Medicare- and nursing home using Medicaid-dominated hospice provision landscape. It’s actually not that traumatic of a change – Medicaid still will pick up palliative drug relief, and in more severe cases durable medical equipment, although families will have to pitch in more care of their dying members. It may shuffle a few more people into nursing homes – regrettable, but since the state made the bad choice years ago to begin funding these facilities for empty beds, filling a few of these actually costs the state little while saving money.

But policy-makers should focus on the forest rather than the trees, in understanding a whole lot of other inferior choices made by them put them into this situation. By cordoning off so many money uses through dedications, it leaves few menu options. At least higher education can cushion the blow as long as politicians allow it to set its own tuition rates, but health care is left with just across-the-board cuts (as with the small rate reduction) or eliminating programs provided not required for the federal Medicaid dollars. Because of these dedications, this circumscribes the policy debate and choice prioritization that can occur at times like this. As this space has argued dozens of times, reform in this area will produce more rational policy-making and better prioritization of needs provision.

Unless, perhaps, you are Lt. Gov. Jay Dardenne, who found his office unable to escape the extraction of $4 million in a mini-sweep of funds. During the budgetary process, the Legislature is prone to taking excess money that has built up in dedicated funds because the dedicated source supplies too much for the actual genuine need present. This money will come from a parks maintenance fund that will delay capital expenditures to restore infrastructure damaged by Hurricane Isaac, because now Dardenne will have to go through the capital outlay process as an alternative.

Which didn’t make him happy and, although he confessed he didn’t know what kind of alternatives he would have pursued if tasked with making the cuts, in the same breath he proclaimed he would do it differently. This implies he would have held fixing some buildings above provision of services in health care, or perhaps in higher education. But, of more importance is what Dardenne, who is seen as a sure candidate for governor in 2015, would do in the macro sense to provide a greater menu of options for choices to be made in these situations that would better match resources to genuine needs and priorities.

By asserting he knows “the manner in which these cuts are being handled is not the way I would handle it,” does that mean he would support unlocking revenue streams? Or increase revenue streams instead? Did he just imply he would want to raise taxes? These are questions he and every other future candidate for the office need to be asked to gauge which path they support to ease the toughness of any future mid-year reductions, a transformation long overdue.

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