- Associated Press - Monday, March 28, 2016

BATON ROUGE, La. (AP) - Louisiana senators were relieved Monday about the limited impact of $70 million in budget cuts on the state health department, after grim forecasts that services could face deep slashing.

“We honestly thought that these cuts were going to be a heck of a lot more devastating to the average citizen out there. And while they are real cuts, I think they’re a lot more palatable,” said Sen. Ronnie Johns, R-Lake Charles.

But Senate Finance Committee members questioned whether the “savings” estimated by Gov. John Bel Edwards will pan out - or create budget gaps that must be filled later.

Committee Chairman Eric LaFleur, D-Ville Platte, and Sen. Jim Fannin, R-Jonesboro, both noted lawmakers heard similar talk during former Gov. Bobby Jindal’s tenure of savings that often didn’t show up, causing repeated budget problems.

“Are these for real?” LaFleur asked Edwards’ chief financial adviser, Commissioner of Administration Jay Dardenne.

At another point, Fannin asked Jeff Reynolds, chief financial officer for the Department of Health and Hospitals, if he was sure about the decline in the estimated number of Medicaid patients. Fannin noted that when similar estimates have turned out to be wrong in past years, “It caused a lot of heartburn.”

“This is my best estimate at this point in time,” Reynolds replied.

Edwards announced the latest round of budget cuts last week, saying all $70 million in reductions required to close the remaining gap before the financial year ends June 30 will fall on the Department of Health and Hospitals, known as DHH.

The Democratic governor said $40 million came from lower-than-expected Medicaid costs and more efficient department administration. The other $30 million was reduced by cutting contracts, trimming spending on the privatized LSU hospitals and tapping into more federal financing.

Dardenne said he believes the numbers are realistic. He said if the estimates are wrong, the agency will have to cut somewhere else to balance its budget.

Even though this year’s reductions were far less devastating than anticipated, Dardenne warned the cuts needed to close the $750 million shortfall in the fiscal year that begins July 1 would be “very drastic.”

This year’s budget was once projected to have gaps of as much as $900 million. During a recently ended special legislative session, lawmakers raised taxes, tapped into short-term financing streams and made cuts of their own to whittle away much of the shortfall.

Sen. Sharon Hewitt, R-Slidell, said she was surprised to read how the latest cuts were handled after the “doom and gloom” scenarios that had threatened to shutter the privatized LSU hospitals and to damage the state’s medical school programs.

Dardenne said his office and the governor pushed DHH to cut costs in its more than $9 billion budget. Reynolds said estimates of Medicaid usage can change regularly and minor changes in such a large budget can generate hefty costs or savings.

“I understand how small percent changes translate into big dollars,” Hewitt said. “It does give me great hope that we can cut the budget in DHH in small percentages.”


Follow Melinda Deslatte on Twitter at https://twitter.com/melindadeslatte

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