HB
1241 by Rep. Cameron
Henry would take money from a resolution of court claims by Louisiana
against BP for various damages because of the Macondo oil spill of 2010 according
to state law (although the case will be heard in federal court), even as the
company is on the hook already to the federal government, state government, and
individual citizens for around $15 billion. No one know what the amount will
be, or when it will be.
But HB 1241 anticipated it will be in the $1 billion range at least and come within the next fiscal year, and
has plans for the dough. Through some legal
machinations, the state is required to cough up about $356 million for the
Budget Stabilization Fund, and even if the proceeds are coming from something
unrelated to a state savings account, in the spirit of the BSF as a repository
of windfall money, that’s an appropriate and none-too-soon, given the legal
imperative, place for it to go.
However, the bill shunts the
remainder of what gets raised up of at least $281 million to around $700
million to the Medicaid Trust Fund for the Elderly, which has nothing to do
activities related to offshore oil exploration and the coastal impact of the
disaster, to a fund where there is no imperative for it to receive any money.
This fund, born
from resolving a dispute with the federal government over its Medicaid payments,
acts as a reservoir to prop up reimbursement rates to nursing homes for
Medicaid recipients unwisely set into law in 2006.
Gov. Bobby
Jindal and the Legislature have siphoned
larger and larger amounts of it in recent years to use state money in other
places in the budget to stave off cuts, where this spending reached (in fiscal
year 2012,
the latest data available) $771 million. So much that, with the amount budgeted
for next year, the fund will go close to zero (its only revenue sources being investment
earnings, fines paid by nursing homes for violations, and specialty license plates).
So while this would replenish the
fund to levels, Henry hopes, of the time of the spill in 2010, it sets up the
possibility to flout brazenly the ideology he and a number of others in the
Legislature have espoused since this term of theirs began: bonus money should
be spent only on bonus items, in this case the obvious focus being on coastal
restoration, not on recurring expenditures. Of course, he and others may
conceptualize this funding as kind of bonus asset if the MTFE keeps that money
as principal and supplements reimbursements with investment earnings.
However, that idea already misses
the mark in that the MFTE began with $500 million as the original windfall; the
2010 level included investment earnings as well, meaning $200 million of that
replenishment equates to replacement of recurring money (captured through
continuing investment) with the bonus. And it threatens over time to eliminate
potentially all of it, spent on recurring items, in part because of an action
taken by the Legislature last year, where to try to avoid that most likely
leads to tax increases.
Whittling it all away again may
occur if the public approves of a constitutional amendment put up by the
Legislature on this fall’s ballot. That essentially would lock the statute’s
reimbursement rate into the Constitution and provide an escalator clause. This
is unwise
on many levels, but chiefly because it creates an incentive for the state
to continue to over-rely on higher-cost nursing home care for the disabled and
elderly instead of home- and community-based programs, costing taxpayers
needlessly more and inviting legal action against the state. A plumped fund
only encourages voters to adopt the reckless constitutional change.
If that happens, perhaps
replenishment even with the noxious idea of translating bonus bucks into recurring
expenditures triggered by trying to keep up with ever-increasing reimbursements
(aggravated by baby boomers moving into their dotage, which at least would have
the salutary impact of filling up the excess capacity of nursing homes that the
state currently helps carry) might be a good idea. Except that Henry had his
bill amended to make it more difficult to use the money in it by requiring a
two-thirds vote to withdraw from it.
This makes it much less likely
the fund would get used and strengthens the hand of those who wish for various
reasons to see higher taxes in the state. For example, a determined third of
either chamber of the Legislature that thinks more wealth redistribution through
higher progressive taxation would be a good thing could block any money at all
ever being used from the MTFE. Or maybe they would relent, in exchange for
using money freed elsewhere for their own pet projects and programs normally
opposed by the majority. And as these expenditures consume about 3 percent of
the entire state operating budget, that’s quite a bit of leverage. To make ends
meet if such obstinacy succeeds, they would force legislators to choose to cut
elsewhere and/or raise taxes.
If Henry hasn’t thought this
through, he needs to understand that’s the practical impact of the amendment.
If he has, he’s either betting on future cutting of the budget (even though in
last year’s budget he supported increased spending) and/or raising taxes
(also in last year’s budget) – and the former may end up less likely that the
latter unless meaningful fiscal reforms such as doing away with wasteful
tax breaks and inefficient
dedicated funding that free up funds get done and done soon. And certainly
actions that force spending more money, such as approving the MTFE amendment,
provide even more pressure to hike taxes.
Neither Henry nor his colleagues
have shown the courage to tackle either of these necessities, so policy-makers
need to avoid the deleterious effects this bill would encourage. At the very
least that amendment needs stripping; better still would be to put $200 million
fewer dollars into the MTFE and more into the BSF (which constitutionally
could go up at present to around $1 billion), which puts the MTFE at its original
amount and the BSF near its maximum and allows the state increased latitude to fulfill
future genuine needs. But in its present state, HB 1241 serves as a compelling
invitation for Louisiana to reach into its citizens’ wallets.
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