Louisiana state government looked under a financial cushion and found about $179 million that will be used to pay a shortfall for the fiscal year that ends in six weeks and to help in efforts to close a massive budget hole for the next fiscal year.
In welcome news after months of finding the state needed to reduce its revenue expectations, which required budget cuts, the panel charged with deciding how much money state government has available to spend on Thursday boosted the state general fund forecast for this fiscal year by $99.4 million and made available $79.3 million for the budget year that begins July 1.
Senate President John Alario, who chairs the four-member Revenue Estimating Conference, said after the meeting: “Finally, some good news.”
Much of this year’s $99.4 million likely will be spent to cover several programs, including an increase in the Minimum Foundation Program, a formula used to cover the expenses of public schools, and other supplemental expenses, Commissioner of Administration Kristy Nichols said.
More students than anticipated enrolled in the state’s public schools this year, requiring the state to spend more money than expected. The state needs about $56 million for the MFP.
“If we hadn’t found the dollars, we would have had to dig down deep,” said Alario, R-Westwego. The state constitution requires a balanced budget.
More of the newfound dollars will go toward TOPS, the program that pays college tuition for qualified students, health care and local sheriffs who house state prisoners in parish jails, Alario added.
Most of the new money for this year came from an accumulation of assessments that were levied against insurance companies to cover claims of customers of companies that had gone out of business. Different laws and fewer insurance company bankruptcies than a couple decades ago have left unused money in the Louisiana Insurance Guaranty Association fund.
The money is there and ready to use. But to get at the money — about $74 million — legislation will need to be filed, approved and signed by the governor.
That process will begin Tuesday when the LIGA board votes on the issue.
Insurance Commissioner Jim Donelon assured the panel that the LIGA board would approve the legislation, and Alario said the legislation would be quickly passed.
Greg Albrecht, the Legislature’s economist, testified that the books, as well as economic forecasts, were showing slightly more money being collected than expected. Corporate income taxes and sales taxes are up slightly, as well as proceeds from gambling casinos.
The REC also ruled that $79.3 million more was available for the fiscal year that begins July 1.
House Speaker Chuck Kleckley, R-Lake Charles, said the $79.3 million extra for next year would help but recalled the budget is trying to bridge a $1.6 billion divide between estimated revenues and projected spending. “Every little bit helps,” he added.
The House passed changes in tax exemption and credit laws that would raise about 70 percent of what is needed in the spending plan for fiscal year 2016. But the proposed budget still is short of money, which, if it cannot be found, could result in dramatic cuts for colleges and universities, as well as health care services.
After the state’s financial problems in the late 1980s and early 1990s, the Revenue Estimating Conference was established to officially designate how much money state government can spend. The REC is made up of the House speaker, Senate president, commissioner of administration and an economist.
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