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New state budget proposal could freeze pay raises for state workers

Published: Jun. 24, 2020 at 6:50 PM CDT
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BATON ROUGE, La. (LSU Manship School News Service) - A Senate committee on Wednesday passed a version of the state’s budget for the upcoming fiscal year and several other bills that could impact the state’s finances, including freezing pay raises for state employees. The bill, approved by the Senate Finance Committee, would use $90 million from the state’s rainy-day fund to fill budget shortfalls caused by nearly $1 billion in lost revenues estimated by state economists.

The Legislature is expected to use more than $1 billion in federal coronavirus aid to fill budget gaps. About half of those funds were used in the current fiscal year, which ends June 30, and the rest will be used in the fiscal year starting July 1.

The committee also passed three other bills Wednesday that would give about $9.6 million in tax breaks next year to hotels, retailers and restaurants trying to recover from the shutdown from the virus, which has caused more than 300,000 Louisianans to file for unemployment.

Meanwhile, the House gave final legislative approval to a tax break for the gambling industry which could cost the state $11 million next year and $83 million over five years.

Sen. Bodi White, R-Central, the chairman of the finance committee, said the various business tax breaks could total between $20 million and $25 million next year.

The Senate committee also included language in the budget bill that would temporarily freeze pay raises for state employees. That would save the state about $60 million. The money would be set aside in a separate fund, and the Legislature would consider whether to issue the pay raises later if the economy improved. If not, the money would be used to fill budget holes. Sen. Heather Cloud, R-Turkey Creek, supported the freeze, saying layoffs could be prevented “if we make wise decisions now as a Legislature.” The committee unanimously approved the plan. But Gov. John Bel Edwards, who also would have to sign off on the bill if it makes it out of the Legislature, opposed the move.

“I know there’s some talk about not doing it or maybe delaying them for some period of time in order to achieve some savings that could be put in the budget. I don’t believe that is necessary and that we should do that at this time.”

Gov. John Bel Edwards

The State Civil Service Commission, a seven-member body with final authority over the central human resources agency for the state, said it would have to approve the move. Individual agencies would have to go to the commission to seek exceptions to the rule, said Byron Decoteau, the commission’s director.

“In all likelihood, the most appropriate route… would be some type of emergency rule process.”

Byron Decoteau

Despite the federal money and the savings on salaries, the Legislature plans to cut spending on higher education by $22 million even as members push for the tax breaks for businesses.

Also on Wednesday, Gov. John Bel Edwards and state Treasurer John Schroder reached a deal to end a fight over what to do with the money that the state has from unclaimed property. Schroder’s office holds money from unclaimed savings accounts and insurance proceeds on behalf of residents. Under the deal, the Legislature will be able to spend $57.5 million of this money. White said it would use some of this money to cover the cost of the business tax breaks. The state will create a trust fund next year to hold other unclaimed property and prevent its use in future state budgets.

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