Last Modified: Wednesday, July 18, 2012 4:58 PM
BATON ROUGE (AP) — Even after announcing $523 million in health care cuts, Gov. Bobby Jindal's administration has slashed only two-thirds of the spending needed to close the entire gap in Louisiana's Medicaid budget.
The administration is banking on better-than-expected revenue projections to close the remaining budget hole.
If that doesn't pan out in the next few months, more reductions are on the horizon. If the funding does show up, questions remain about possible legal hurdles to accessing the cash to fill the Medicaid budget for the fiscal year that began July 1.
The Jindal administration announced $523 million in cuts last week, largely to the LSU public hospital system that cares for Louisiana's poor and uninsured.
But the estimated gap in Medicaid financing was $859 million. Another $94 million in state funding will be needed to draw down the federal matching dollars to fill the remaining hole described by the Jindal administration.
Commissioner of Administration Paul Rainwater, the governor's top budget adviser, said state economists believe there's a "strong likelihood" the state brought in more tax revenue for the fiscal year that ended June 30 than was expected or budgeted.
Rainwater said the state should know if there was surplus cash — and how much — by August or September.
However, lawmakers already earmarked how excess money should be spent, requiring funding up to $204.7 million to be used to replenish the state's "rainy day" fund, which was tapped to fill a deficit that cropped up last year.
"I'm not sure any of that's available for direct carryforward into (this year) to plug into the budget. I don't think it is. I think that money's spoken for," Greg Albrecht, the chief economist for the Legislative Fiscal Office, said Tuesday.
Rainwater's spokesman, Michael DiResto, disagreed. He said the rainy day fund repayment provision passed by lawmakers only applies to dollars recognized before the fiscal year ended and won't apply in the scenario described by Rainwater.
Meanwhile, if lawmakers or the administration are hoping the current year's revenue forecast will improve and fill the Medicaid hole, Albrecht said nothing suggests a surge in income projections for this year.
"At this point, I don't see economic conditions that suggest some material improvement," he said. "We don't have some great winds of optimism blowing."
Income tax collections in Louisiana have remained sluggish as the state economy continues to feel the impact of the national recession. The state has faced repeated rounds of midyear budget cuts as income projections failed to meet targets.
"I wouldn't say that I have any information that would lead me to believe that the revenue figures will be better. I hope they will be, but I think that's just speculation right now," said Senate Finance Committee Chairman Jack Donahue, R-Mandeville.
Rainwater said the administration will determine if more cuts are needed after getting updated state income projections. "The bottom line is that we will have a balanced budget," he said.
The cuts stem from a change in Louisiana's federal Medicaid funding that was included in a federal highway funding bill, to address an error in a post-hurricane provision that helped the state.
Lawmakers have scheduled hearings to get details about reductions they worry could shutter LSU hospitals and damage care to the poor and uninsured.
As divvied up by the administration, $329 million of the cuts will hit the public health care system run by LSU. That will strip 25 percent of the public health care system's nearly $1.3 billion budget.
Health and Hospitals Secretary Bruce Greenstein described the cuts as requiring the university system to make changes to its model for providing services, not requiring closures.
House Speaker Chuck Kleckley scheduled a meeting of the House budget and health care committees Thursday to discuss the budget reductions.
"The secretary has said this is an opportunity to reform health care. Well, that's fine and I support that, but I and the other House members want to know how they plan to do that," said Kleckely, R-Lake Charles.