BATON ROUGE — Lawmakers agreed Monday to $38 million in spending cuts across state agencies, one of the first steps to rebalance Louisiana’s budget, but nowhere near the level of reductions needed to close the state’s hefty financial gaps.
The cuts approved by the Joint Legislative Committee on the Budget — combined with reductions made by Gov. John Bel Edwards a day earlier — have trimmed $60 million from departments.
But that’s only a fraction of the action needed to close an estimated $850 million to $950 million budget gap before the financial year ends June 30. Next year’s shortfall is larger, estimated to top $2 billion in the year that begins July 1.
Edwards is asking lawmakers to raise taxes in a special legislative session that opened Sunday, saying deep reductions would hit colleges and health care services without new taxes.
TAX TALK
The Democratic governor’s revenue secretary, Kimberly Robinson, presented the tax proposals Monday to the House Ways and Means Committee. Edwards is recommending increases to the state sales tax, to taxes charged on alcohol and cigarettes and to business taxes, among other a long list of other items.
Likely most noticeable to state residents would be Edwards’ proposal to raise Louisiana’s 4-cent sales tax by another penny on every dollar spent. The sales tax hike would kick in April 1. Robinson said that could raise an estimated $200 million over three months to help close this year’s budget gap and hundreds of millions more for next year’s shortfall.
She described the sales tax hike as a temporary “bridge” until 2017 when she said lawmakers can have a broader discussion about the state’s tax structure.
TAX VOTES
Ways and Means Chairman Neil Abramson, D-New Orleans, said he’s not sure when his committee will start voting on the proposals, as lawmakers await data on the tax implications.
Many of the governor’s tax bills weren’t filed until Sunday night, and the Legislature’s financial analysts are still determining estimates of how much each bill would raise.
“We have a lot of hard decisions to make. We want to make sure everybody has enough time to be informed and thoughtful about their decisions,” Abramson said.
Lawmakers have a short time to vet the ideas. The special session must end March 9, and tax increases can’t be considered in the regular legislative session that begins in mid-March.
WORST-CASE SCENARIOS
While Ways and Means started sifting through tax ideas, the House Appropriations Committee dived into the details of the worst-case scenario cuts the Edwards administration says could happen without raising new revenue.
The governor says health care services could be shuttered along with some college campuses if Louisiana doesn’t have more money in its treasury to pay for expenses.
Lawmakers have shown particular concern with proposals that would dramatically cut the TOPS free college tuition program next year, forcing thousands of students to lose their state aid.
Republican lawmakers have suggested they think some of the scenarios are scare tactics. GOP lawmakers want to make deeper cuts than proposed by Edwards before they look at taxes.
“Some of us are not ready to talk about revenue increases,” said Rep. Tony Bacala, R-Prairieville. “We’re trying to identify things that are non-essential, and if they’re non-essential maybe we need to do without them.”
BUDGET CUTS
The $60 million in cuts approved by Edwards and lawmakers so far to rebalance this year’s budget hit most state agencies, but few raised public complaints because of the depth of the threat of additional slashing on the horizon.
M
eanwhile, Edwards enacted a partial hiring freeze across the executive branch to try to save money. He also issued an executive order calling for a review of consulting contracts across most state departments and giving his chief financial adviser the ability to order the cancellation of contracts deemed to be “inappropriate, unnecessary or duplicative.”