Health care services and public colleges are bearing the brunt of cuts to close a $248 million midyear state deficit, under spending reductions made Tuesday by Gov. Bobby Jindal to rebalance the budget.
The Department of Health and Hospitals will lose $108 million and higher education will take an $84 million cut, to cover more than three-quarters of the gap in the $29 billion budget for the fiscal year that ends June 30.
“We’ve got to limit government spending so we can live within our means,” Jindal said.
Other cuts are spread across state agencies. Every department received either a 7.6 percent cut to its state general fund appropriation or a 3 percent cut of its total budget, whichever was less, under the governor’s executive order.
The state social services department took a $14 million hit, elementary and secondary education received a $16 million cut and the charity hospitals run by Louisiana State University lost $2.5 million.
“Every agency will be having to make some tough choices,” Jindal said.
The reductions fall on agencies and services that had already endured cuts as they started the budget year. Any health care cuts in the Louisiana Medicaid program will grow worse because state Medicaid dollars draw down additional federal matching cash.
The hefty size of the slashing for health care and colleges was expected. They are the two largest areas of discretionary spending in Louisiana’s budget and traditionally take the heaviest cuts when the budget is tight.
Budget-cutting plans from each agency are due to the governor’s fiscal office by Jan. 8.
Jindal said savings from a partial government hiring freeze he enacted and from streamlining initiatives in his cabinet departments could offset some cuts.
The governor said he expects some of the health care reductions to involve shrinking the rates paid to private health care providers, like hospitals and nursing homes, for taking care of Medicaid patients.
J.T. Lane, deputy chief of staff at DHH, said the department is looking at ways to cut costs, become more efficient and trim low-performing programs to help generate savings.
“Our first priority is to maintain services for the people who rely on them,” Lane said.
Three departments — the corrections, juvenile justice and military agencies — didn’t get budget cuts in Jindal’s executive order. But those departments already faced their own shortfalls, and the governor said they’ll have to make cuts to close their internal budget gaps.
The budget deficit stems from two problems: a shortage of more than $50 million in what the state owes public schools to cover unexpected student growth and a $197 million drop in state tax income forecasts, tied to falling sales tax collections.
Jindal doesn’t need approval from lawmakers for the cuts. For a midyear deficit, the governor is able to cut up to 3 percent of spending for each “budget unit” without going to the House and Senate budget committees.
The public college cuts will require approval from federal officials, according to Jindal’s top budget adviser. Louisiana used federal stimulus money to help pay for college costs this year, and there are restrictions on how education can be cut if the stimulus money was used.
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