Louisiana's income projections improved Thursday, but state officials were muted in their excitement because a nearly $1 billion budget gap still looms next year.
The Revenue Estimating Conference, which decides state income forecasts based on the recommendations of two economists, increased revenue projections by $153 million for the current financial year that ends June 30. Next year's forecast was boosted by nearly $234 million.
The improvements were largely driven by better-than-expected sales tax collections, and also by slight upticks to corporate and severance tax expectations.
That's not enough to dig Louisiana out of the hole, known in the state Capitol as the "fiscal cliff," that hits when the new financial year begins July 1, as temporary sales taxes enacted by lawmakers expire.
Even with Thursday's revisions, general state tax collections are expected to shrink by $994 million, from nearly $9.6 billion this year to $8.6 billion next year. And the economists warned that the state's jobs picture remains shaky, as the oil and gas industry remains stagnant.
"The fact that we're adding some money into the forecast today is not waving the flag that, 'Hey, party time is back,'" said Greg Albrecht, the Legislature's chief economist.
Senate President John Alario, a Republican, agreed, saying it's not time to "go out and break the champagne bottle."
Gov. John Bel Edwards' chief financial adviser, Commissioner of Administration Jay Dardenne, reminded people that "we're barreling toward the cliff that we're all going to hurtle off with no parachutes if we don't fix this." Officials estimate that next year's nearly $1 billion shortfall could balloon to as much as $4 billion in cuts with the loss of federal matching dollars.
Edwards, a Democrat, wants to raise taxes to offset next year's budget hole, but he's faced opposition to previous tax proposals from House Republican leaders.
Despite the grim future, state officials did celebrate that Louisiana is on track to avoid midyear budget cuts for the first time in nearly a decade.
"No matter that this is very tempered enthusiasm, I think it's good news that we're moving in a positive way," Dardenne said.
In addition, the state has a more than $120 million surplus left over from last year. Those dollars can't help out with the impending fiscal cliff, because they are constitutionally required to be spent on a specific list of one-time items, such as debt payments and construction projects.
Lawmakers will decide how to spend the surplus and the other additional dollars recognized in the forecast when they return for their regular legislative session in March.