BATON ROUGE, La. (AP) — Gov. Bobby Jindal said Thursday his proposed $24.7 billion budget for next year relies heavily on privatization plans for LSU's charity hospitals to offset the loss of hundreds of millions of dollars in federal Medicaid funding.
Congress cut Louisiana's Medicaid payment rate last year, and the drop in federal financing is a significant factor in the state's more than $1 billion budget gap next year.
Jindal said his budget will include "significant savings" in the LSU hospitals by turning many of them over to private management, under deals that aren't complete and with financing arrangements that haven't been explained in detail.
The Republican governor gave a brief overview of his spending proposals for the upcoming 2013-14 fiscal year that begins July 1. The full details will be outlined Friday to lawmakers.
"We're presenting a budget that's balanced, that protects our priorities," Jindal said.
He said his budget includes minimal cuts to the health department and, with tuition increases, will keep spending flat for colleges. Education spending on public elementary and secondary schools also would stay the same, with an increase to pay for student growth.
State government employee rolls would shrink by about 10,000 workers, but much of the reduction is tied to the privatization of the LSU-run public hospitals that take care of the poor and uninsured.
Jindal said about 7,000 LSU employees would be laid off because of the switch to private hospital management, though he said about 90 percent of the workers were expected to get job offers to stay with their hospitals.
The governor offered no explanation of where cuts would be made to balance the spending plans or what sources of financing are proposed to piece it all together.
The state would need another $1.3 billion above its estimated income to maintain existing programs and services in the fiscal year beginning July 1, while also accounting for inflation, budget analysts say.
Appropriations Committee Chairman Jim Fannin said Thursday he was encouraged about coping with the shortfall after getting a sneak peek at Jindal's spending recommendations.
"We still have tremendous issues, but I feel better, at least at this point, about the budget than I felt at this point last year," Fannin, D-Jonesboro, said in an interview.
He said he doesn't yet know the details of where cuts will fall — and he acknowledges that could change his perspective as legislative budget analysts comb through the plans.
"I'm two weeks away from knowing what's really in it," Fannin said.
The committee chairman said the budget proposal anticipates using the savings from a possible refinancing of the state's tobacco settlement to plug holes. The Jindal administration has estimated such a refinancing, which hasn't yet been approved, could generate as much as $85 million in savings.
As always, the budget proposal contains one-time, piecemeal funding to pay for ongoing state government programs and services, Fannin said.
That will fuel continued criticism from a group of House Republicans who complain the use of money that doesn't reappear year after year perpetuates a cycle of ongoing financial problems for the state, when the dollars fall away and need to be replaced.