BATON ROUGE–Lawmakers agreed Tuesday on a $34 billion state budget that provides hundreds of millions for businesses hurt by the COVID-19 shutdown but freezes $60 million in pay raises for state employees and cuts funding for colleges that also are struggling financially.
As a 30-day special session was nearing an end, the House agreed to a Senate proposal to temporarily set aside the pay raises for state employees and review in November whether tax collections had rebounded enough to provide them.
If the economy remains stagnant or depressed, the money will be used to fill holes in the budget.
In addition to nearly $800 million in federal coronavirus aid money and the money saved on pay raises, lawmakers also will use $90 million from the state’s rainy-day fund to plug budgetary holes.
Still, the budget, which covers the fiscal year that starts Wednesday, includes cuts in state spending on higher education.
Leaders of the various university systems have said that their costs and lost revenues associated with the coronavirus far exceed the amount of direct aid that they are receiving from the federal government, leaving them in a difficult position.
Rep. Jerome Zeringue, R-Houma and the chairman of the House Appropriations Committee, sponsored a bill to let public universities raise student fees for another year to cover some of the shortfall. But in both this spring’s regular session and in the special session that ended Tuesday, the Legislature let that proposal expire.
Republican lawmakers pushed for tax breaks and incentives for businesses and clashed with Gov. John Bel Edwards, a Democrat, in shifting more than $300 million in federal grants from local governments to small businesses. Supporters said they needed to help businesses that were struggling due to mandatory closures and save jobs.
Democrats pushed through one-time payments of $250–which equals one week of unemployment benefits–for up to 200,000 front-line workers, from grocery clerks to health-care workers, during the COVID-19 stay-at-home order. The $50 million to cover this will come from $1.8 billion in federal coronavirus aid funds.
All told, roughly two-thirds of the $34 billion in the state budget comes from federal funds, including grants for the state’s Medicaid program.
State economists predict that nearly $1 billion in lost revenues due to the virus will create shortfalls in the upcoming fiscal year.
The state split its use of the federal coronavirus aid between the fiscal year that ended Tuesday and the coming fiscal year.
Lawmakers have suggested returning to the Capitol in October for another special session to determine how to spend any additional federal coronavirus funds or to make cuts if the budget situation worsens.