BATON ROUGE — The budget hits keep on coming in Louisiana, with a new $370 million midyear deficit emerging Monday and more red ink on the horizon.
The state’s income forecasting panel, the Revenue Estimating Conference, downgraded its projections for the 2015-16 fiscal year that began July 1, to account for plummeting oil and gas prices and lower-than-expected business tax collections.
Gov. Bobby Jindal’s administration says it will close the midyear gap quickly, along with a $117 million deficit from last year that has yet to be addressed. Jindal’s top budget architect, Stafford Palmieri, said the administration could release its rebalancing plan for the $25 billion budget as early as Tuesday. She wouldn’t say what might be included.
“We’re going to protect critical services and maximize all revenues that we have,” Palmieri said. “We’re going to solve the problem. Whatever that takes, it’s going to be solved.”
Senate President John Alario said he didn’t think the budget could be rebalanced by tapping into reserve funds and patchwork fixes. He expected Jindal’s plan to include cuts to programs and services.
“I don’t think you can avoid any cuts,” said Alario, R-Westwego. “I don’t think there’s enough smoke and mirrors around to balance these numbers out.”
Alario said he hopes public colleges can be largely shielded from slashing, but he doesn’t expect health care services will escape reductions. The joint House and Senate budget committee will discuss Jindal’s latest plan Friday.
The term-limited Republican governor, whose tenure ends in January, has had to close midyear budget gaps each of his eight years in office. Jindal will make these latest cuts as he’s running a presidential campaign in which he highlights his management of the state’s finances as a selling point.
Louisiana’s next governor will be chosen in an election Saturday — and whichever man is selected faces a more than $1 billion budget gap projected for next year’s budget that Jindal won’t tackle before he leaves. Democratic state Rep. John Bel Edwards is in a runoff with Republican U.S. Sen. David Vitter to determine who gets the job.
“There won’t be a whole lot of time for celebration, Alario said. “It’ll be time for them to roll up their sleeves and get busy in trying to help this problem.”
The shortfall for the 2016-17 fiscal year that begins July 1 had been pegged at $713 million, but it was boosted by another $324 million when the Revenue Estimating Conference lowered next year’s forecast.
Corporate income, severance, sales and individual income taxes all are coming in below projections, Jindal administration economist Manfred Dix told the four-member Revenue Estimating Conference.
“Very depressing,” Dix said to sum up.
Nose-diving oil prices and falling gas prices have hit the state’s severance tax revenue and mineral royalties. The Legislature’s chief economist, Greg Albrecht, said the impact also is spilling into industries tied to oil and gas, causing a ripple effect of declines in corporate tax and sales tax collections for the state.
Meanwhile, lawmakers’ efforts to scale back corporate tax breaks to drum up more money for the treasury appear to have generated less cash than expected, according to Albrecht and Dix. Businesses cashed in tax credits and rebates early and reworked the use of those tax break programs to try to lessen the blow to their bottom line.
“It appears there was a rush on tax credits,” Alario said.
The four-member Revenue Estimating Conference includes Palmieri, Alario, House Speaker Chuck Kleckley and LSU economist Jim Richardson.