Governor-elect’s adviser warns of ‘more dire’ budget woes

BATON ROUGE — Louisiana’s budget woes are even worse than the incoming administration of Gov.-elect John Bel Edwards had anticipated, with an estimated shortfall of up to $750 million that must be closed by the end of June, a top aide to Edwards warned Wednesday.

Jay Dardenne, Edwards’ chief fiscal adviser, told reporters that the incoming administration hasn’t settled on a plan for fixing the problems with the current fiscal year’s $25 billion budget. But he said Edwards hasn’t ruled out tax increases, which would need legislative approval.

“All the options are on the table for everything,” Dardenne said during his first press briefing since Edwards picked him to serve as commissioner of the Division of Administration.
Dardenne said the outlook for the current fiscal year “is more dire than we thought it was” due to new revenue estimates that show a continuing drop in oil prices and a slump in collections from corporate income taxes and sales taxes.

Dardenne also said the Edwards administration projects a total estimated shortfall of $1.9 billion for the next fiscal year, which starts in July.

“This is the clear view, the true picture of where we are today. It is not pretty. It is not sugarcoated. It’s just the facts,” Dardenne said.

Edwards, a Democrat who won the runoff election for governor in November, will be sworn into office on Jan. 11. He inherits the state’s budget problems from Gov. Bobby Jindal, a Republican who mounted a failed presidential bid and refused to support anything he considered a net tax increase and leaned on short-term budget fixes.

Dardenne said Edwards is committed to ending the state’s “over-usage of one-time revenue and budget gimmicks that have been used to balance this budget.”

“We’re blowing away the smoke and breaking the mirrors regarding the state budget,” he said. “We’re committed to stabilizing the budget and structurally changing the way Louisiana handles its budgetary obligations to our citizens.”

In a letter to lawmakers on Wednesday, Dardenne said the latest economic performance estimates, which include November figures, show state tax collections coming in up to $450 million less than projected on top of $300 million in spending gaps for existing programs for the current fiscal year. Those two figures combined add up to a total shortfall of up to $750 million.

“I don’t have any explanation for why November was so dramatic, but it was. And those numbers have come in, and it’s been shocking to us to see the degree of shortfall in expected corporate income tax, the decline in sales tax revenue and the steady reduction in the price of oil,” Dardenne told reporters.

Among the existing programs that have spending gaps are the state’s TOPS free college tuition program and the Medicaid program, which provides health care for the elderly and disabled.