Committee action, Mar. 28: SB 358, budget remarks

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HB 358 by Sen. Blade Morrish would repeal the MediFund Board and transfer its powers to the Board of Regents. Morrish explained to the Senate Finance Committee that elimination of the Board, which essentially the Regents operate, would streamline government. It hasn’t really functioned as intended nor does its attached fund have any money. The Regents now would control that.

Sen. Sharon Hewitt asked why not eliminate the fund? Morrish said he simply wanted to make government more efficient. Higher Education Commissioner Joseph Rallo said he wanted to keep the fund because it was a tax-exempt receptacle for donations.

After approval of technical amendments, the bill was reported favorably without objection.

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Commissioner of Administration Jay Dardenne gave the committee an update on budgetary reductions that occurred to the Department of Health and Hospitals. Among the more interesting points made, he noted savings coming from an unanticipated fall in Bayou Health enrollment, increased scrutiny on client eligibility for programs (which had something to do with Bayou Health enrollment decline), renegotiating contracts with providers including with the partners administering charity hospitals, and some gamesmanship with delaying payments to the partners between fiscal years with the federal government. In all, it represented a $70 million reduction in state and $115 million cut in federal funds.

Sen. Conrad Appel asked whether a good portion of the cuts were recurring. DHH Undersecretary Jeff Reynolds said they were and could be incorporated into next fiscal year’s budgets. He also said better oversight of the Pediatric Day Health Care program also could produce additional savings. Appel pointed out the philosophy behind fiscal policy should focus on restructuring that maximizes efficiency to meet spending targets, which as DHH comprised about 40 percent of the budget could lead to large savings.

Sen. Jim Fannin wondered how accurate the numbers could be for next year, pointing out that Revenue Estimating Conference numbers had not proven that accurate in recent years. Reynolds noted that the unexpected decline in Bayou Health enrollees, for example, could reverse without any warning, leading to a shortfall. Dardenne also expressed hope that some lawsuit settlements could come through to help the general fund.

Hewitt wondered why environment had changed in just a couple of weeks. She noted two weeks previously there seemed to be a crisis atmosphere concerning DHH cuts, but when revealed these seemed easier than that. Dardenne said more time to figure out data trends, a shift in focus with more scrutiny on efficiencies, and the idea of swapping present fees with future fees all manifested in that time period. She echoed Appel’s comment that small changes could yield big savings, with events of the past two weeks demonstrating that, and also that spending had to be by need, not by picking revenue targets and spending up to them.

Sen. Bret Allain wondered whether the partnership arrangements would be necessary under Medicaid expansion, given that, with the recent cuts, partners continued to emit dire statements about low rates. Dardenne and Reynolds both said the beginning of the next fiscal year with the onset of expansion would be an excellent time to rethink the entire concept.

Legislative regular session through Mar. 26, 2016

Bills still may be introduced, leaving us thusly ….

THE GOOD: HB 917 by Rep. Barry Ivey would create a consolidated committee to make investment decisions for state and statewide retirement systems.

THIS WEEK FOR THE GOOD: HB 657 passed House committee; HB 812 with minor amendment passed House committee.

Committee action, Mar. 21: HB 74, HB 163, HB 584, HB 657, HB 812

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HB 74 by Rep. Dee Richard would up the ante on previous efforts to reduce state contracts by 10 percent, setting it at 15 percent. It was amended back to 10 percent, then voluntarily deferred a week. Richard told the House Appropriations Committee he wanted to work with the Gov. John Bel Edwards’ Administration to put it in a form more favorable to it; historically, the Gov. Bobby Jindal Administration had shown reluctance to its passage.

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HB 163 by Rep. Kenny Havard would allow the Legislature to place impediments, allegedly to improve the process, to contracting for amounts of over $5 million annually. With little discussion it was approved without objection.

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HB 584 by Rep. John Schroder would amend the Constitution to increase the latitude of budget-cutting possible during a fiscal year. It would increase the amount that the governor and Joint Legislative Committee on the Budget or Legislature could reduce from 5 to 10 percent almost all expenditures in a fiscal year. It would not affect the 0.7 percent rule, which is the prior step that must reduce the general fund by that much first before triggering the ability to reduce all funds not otherwise constitutionally protected.

Rep. Jerome Zeringue said that he thought it would allow sweeps out of funds, but Schroder said his bill dealt only with appropriated. Zeringue felt the existing language allowed for too much latitude to take away money that was not specifically appropriated as funding sources for operating expenses and multi-year commitments could inflate the money at risk to count for cutting. Schroder said it is the decision of policy-makers to make cuts, and agencies could lobby them in these circumstances, and did not want to change the language of the amendment.

Rep. Walt Leger thought the existing 5 percent reasonable, and that 10 percent could be too much. Schroder said best judgment must be used in a reduction decision. If releasing all dedications was not possible, he said this was the next best step. Leger said this level created too many “winners and losers;” the problem was limiting revenues, saying that finding more of these was a different way to be flexible. Schroder said the bill’s approach simply allowed for spreading out potential cuts and not put it on the backs of health care and higher education.

Schroder closed by saying he didn’t think this the greatest of bills, but it was better than having to raise new revenue. He said he would not move it if Edwards objected. Leger objected, and it passed 15-7 with mostly Republicans approving, and all Democrats present objecting.

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HB 657 was the companion statute, and again objection was raised. This time it passed 16-7 (Schroder voted in favor) along the same lines.

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Schroder’s HB 812 would create greater impetus for the state to use its own available facility space rather than rent from others. He had amendments prepared after the Division of Administration had vetted the bill and raised concerns that would eliminate smaller buildings (below 10,000 square feet), included leased as well as state-owned buildings, limited reporting to vacant space with agencies their own spaces, and to include special leases.

Chairman Cameron Henry wondered if the space specification was too limiting, and thought that should be in the report regardless of length. Schroder said reporting should be more frequent, whenever if space became available and a noncompliant agency asked to move to that space did not comply quickly enough. Rep. Rick Edmonds wanted to lower the space requirement by amendment, but Henry asked that he hold off and let them review the entire list before changing the standard. He did, and Schroder’s amendments were added.

The bill moved favorably without objection.