Jindal uses trust funds to patch budget

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In his struggles to patch together the state’s operating budget, Gov. Bobby Jindal has raided funds that weren’t necessarily planned for budget-balancing.

The maneuvers leave any governor to follow Jindal, who is term-limited in early 2016, with fewer dollars socked away in savings accounts, less money from annual interest earnings to pay for ongoing expenses and lingering disputes tied to the fund sweeps.

The Republican governor has steered tobacco settlement dollars away from health and education trust funds and into the annual operating budget; zeroed out a list of funds that had dedicated fees and other balances planned for specific projects or purposes; and drained an elderly trust fund that once contained more than $830 million.

His administration has even gotten into a fight with a group of legally blind vendors for tapping into the vendors’ trust fund to pay for the state’s legal dispute over a contract for food services operations at Fort Polk.

State lawmakers have been complicit in many of the maneuvers, signing off on plans to drain and cap trust funds in various bills and the annual operating budget. But while they balanced the budget, the fund raids also led to lawsuits.

A Baton Rouge judge ruled that Jindal and lawmakers shouldn’t have taken $3.7 million from a retirement fund for probation and parole officers. The Public Service Commission also is suing over a similar removal of money from its dedicated accounts. That lawsuit is pending.

Faced with near-constant budget shortfalls since entering office in 2008, Jindal has staunchly refused to raise taxes. He has repeatedly argued that the fund raids were needed to try to protect critical services in state government.

Three years ago, to drum up new dollars for the state’s free college tuition program called TOPS, the governor pushed a constitutional amendment that dedicated an annual $40 million stream of tobacco settlement money to the program.

The maneuver, approved by lawmakers and backed by voters statewide, took a slice of money that otherwise would have been divided between health care and education trust funds, stopping the further buildup of the trust funds and lowering future interest earnings.

But it gave the Jindal administration new dollars to plug into TOPS each year.

The governor proposes similar financing plans in his $25 billion budget recommendations for the 2014-15 fiscal year that begins July 1. Lawmakers will decide whether to support the ideas during the legislative session that begins March 10.

For example, Jindal wants the state to take $50 million in cash from a fund held by the New Orleans convention center, which contains dollars primarily generated by local taxes, and replace it with long-term borrowing paid off with interest over several years.

The largest depletion involves the Medicaid Trust Fund for the Elderly, created with an infusion of federal cash more than a decade ago during former Gov. Mike Foster’s administration.

If lawmakers agree to Jindal’s proposal to tap into the fund again for next year’s budget, they will have drained the entire balance, according to the nonpartisan Legislative Fiscal Office.

When Jindal took office, the elderly trust fund contained more than $830 million.

Officials involved with creating the fund expected the state to leave the principal intact and mainly use the interest and investment earnings, so the trust fund would provide a stream of funding for decades to pay for nursing home care and other elderly health care services.

Instead, the Jindal administration – with approval from lawmakers through the budget process – keeps dipping into the principal to plug health care budget gaps and finance Medicaid services at nursing homes.

The balance now sits at about $230 million. The governor’s budget proposal for next year suggests using all of that to draw another $381 million in federal Medicaid matching money, according to the fiscal office.

When the elderly fund runs dry, the state will have a financial problem, with the primary payment source for nursing home care disappearing and a gap of hundreds of millions of dollars to fill.

But the governor will have patched his way through another budget year.

EDITOR’S NOTE: Melinda Deslatte covers the Louisiana Capitol for The Associated Press.