Louisiana Gov. John Bel Edwards opened this year’s legislative session by announcing the state’s first presumptive case of the highly contagious novel coronavirus, a global sickness that has driven volatility in stock and oil markets.
After a customary but brief welcome message during his State of the State speech Monday, Edwards talked about the state’s response to the virus for which he had created a task force earlier this month.
“There are a lot of people in this chamber today and even more watching, and I would be remiss if I didn’t take this opportunity to update you on Louisiana’s response to COVID-19,” Edwards said at around 2:15 p.m. “Just minutes ago...I learned that we have a presumptive positive case of coronavirus in Louisiana, a Jefferson Parish resident who is hospitalized in Orleans Parish.”
The case is being treated as if it’s positive while the Centers for Disease Control and Prevention confirm the diagnosis, he said, promising that the state will be transparent in releasing information about the spread of the disease.
Edwards also urged lawmakers to share accurate information with constituents, while assuring them that the current threat remains low.
By Wednesday, the Louisiana Department of Health said there are six suspected cases of COVID-19 in the state.
Dealing with the complications and costs of the virus during the nearly three month long legislative session won’t be the only problem Edwards faces while pushing his Democratic agenda and budget just two months after taking the oath of office for his second, four-year term.
Republicans still hold a supermajority in the Legislature, and after the October primary the Senate amassed enough GOP members to override the governor's vetoes. Republicans in the House of Representatives are two seats away from that threshold.
Top Republicans on the revenue estimating conference, like last year, have refused to vote to adopt a revenue estimate for the fiscal 2021 budget.
Senate President Patrick Page Cortez, R-Lafayette, objected to adopting an estimate Jan. 31 without the inclusion of money from the state’s unclaimed property fund, which have been withheld by State Treasurer John Schroder, a Republican.
On Feb. 7, Edwards and his budget chief Jay Dardenne, like last year, proposed a state budget without an official revenue estimate.
Edwards urged lawmakers Monday to address the revenue estimating conference issue, a point made as the price per barrel of oil plunged 24%.
“As we’ve seen in the last 24 hours, we know that predicting the market and state revenue is a challenge,” he said. “That’s why it is just as important to listen to the economic experts we have when it comes to adopting a forecast as it is to listen to our medical experts on how to prepare for and respond to the coronavirus.”
State revenue collections could fall for a prolonged period of time because of the recent dispute between OPEC and Russia over oil production, which has driven prices down amid falling demand as the coronavirus expands globally.
The oil and gas extraction industries provide roughly 157,000 jobs in the U.S., with concentrations in Texas, Wyoming, Louisiana and Arkansas, Municipal Market Analytics partner Matt Fabian wrote Monday.
“If oil prices stay low, job losses and tax-receipt declines in the U.S. become more likely, dampening revenue projections for many fiscal year 2021 state budgets,” he said.
“Even well-prepared states may be inclined to employ non-recurring budget solutions in the near-term, bending their own rating trajectories a bit lower but protecting local government credit quality from immediate aid reductions and hurt,” Fabian added.
Edwards also talked about his legislative priorities on Monday, saying he has requested increased funds in higher education, which he said Louisiana had “disinvested” in over the past decade, as well as additional funding for K-12 and early childhood education.
Other issues he will support during this year’s session, he said, include workforce development programs; an increase in the state’s hourly wage, which is based on the federal minimum wage; wage equality for women; and lowering the cost of auto insurance.
Unlike prior fiscal years that have required steep budget cuts, Louisiana has a $534 million surplus resulting from the state’s improved economy, as well as higher personal and corporate incomes.
By law, the surplus can only be deposited into the rainy day fund, paying the state’s unfunded accrued pension liability, making bond payments, and financing transportation, capital outlay and coastal projects.
Edwards said he has proposed a spending plan based on the most conservative revenue estimate by the state’s economists even though an official forecast hasn’t been adopted.
Edwards’ total fiscal 2021 budget recommendation is $32.16 billion, an increase of $284.8 million or 0.89% over the current spending plan. The general fund portion is $10.14 billion, an increase of $335 million or 3. 41%.
Lawmakers, most of whom are often at odds with Edwards over spending, will decide how to craft the state’s budget.
With the cost of responding to COVID-19 unknown, the state budget could be more dependent on smaller revenue sources such as the unclaimed property funds that Treasurer Schroder has withheld.
Edwards
This is the second year Schroder has refused to release the funds for appropriation by the Legislature, although he did release money to pay debt service on special revenue bonds issued in 2013 and 2015 to finance transportation projects.
The lawsuit, filed in the 19th Judicial District Court in the Parish of East Baton Rouge Feb. 7, seeks a writ of mandamus from the court that would compel Schroder to “perform his ministerial duty” to transfer the money for fiscal years 2019, 2020 and all future fiscal years to support the state budget.
"Gov. Edwards is suing me because I won't let him spend unclaimed property [funds] in a state budget that tops $32 billion," Schroder said. "Actions like this make it hard for the public to have faith in the government process."
Although Schroder said unclaimed property funds belong to the owners and not the state, the Legislature has appropriated the funds since at least 1997, and while Schroder was a member of the House of Representatives from 2008 to 2017. He became state treasurer in November 2017.
The legislative session runs through June 1.
