Gov. Bobby Jindal’s administration is quietly notifying legislative leaders that Louisiana closed the books on the last budget year with a deficit, but the administration isn’t saying publicly how deep the problem is.
The announcement of the deficit’s size is expected in mid-October, when details are due to the Legislature’s joint budget committee.
State Treasurer John Kennedy estimates the gap exceeds $100 million.
House Speaker Chuck Kleckley and House Appropriations Committee Chairman Jim Fannin said Wednesday they’ve been told by administration officials that the state ended the 2014-15 fiscal year on June 30 in the red.
Both men said they haven’t received a final tally.
“I have not gotten anything official,” said Fannin, R-Jonesboro. “In conversation with the Division of Administration, they have indicated that there will be a deficit.”
Kleckley, R-Lake Charles, said: “I have not been told what the final number is. They were still working on the final numbers.”
Although Kennedy is the state treasurer, the Republican said he can’t get a firm number from the administration. He said his office has done its own calculations to determine the shortfall is “well over” $100 million.
The deficit, which must be closed within nine months, heaps new worries on a state struggling with a long list of budget problems. And it comes as Jindal is running for the GOP presidential nomination and pitching himself as a strong manager of Louisiana’s finances.
“I don’t know why the governor doesn’t want to look taxpayers in the eye and tell them what’s going on,” Kennedy said. “The governor needs to come home and deal with this right now.”
The deficit’s cause is unclear. Jindal’s Division of Administration didn’t respond to requests for additional information about the problem.
House and Senate financial analysts are working with state agency leaders on options for cutting spending in this year’s $25 billion budget to close the gap, Fannin said.
The Jindal administration could opt to leave the budget-balancing needed to address the deficit to the next administration. Jindal is term-limited. His successor, to be chosen this fall, will take office in January.
Louisiana has faced repeated budget shortfalls during Jindal’s two terms in office, a combination of the economic downturn and the cost of tax breaks that have siphoned more dollars away from the state treasury than expected.
Rather than match state spending to income, the governor and lawmakers have raided savings accounts, sold property and used other short-term fixes to patch together budgets. But that creates new gaps each year.
In addition to last year’s deficit, Louisiana’s free college tuition program, TOPS, is estimated to be short $19 million this year, and the Medicaid program is expected to face a gap that legislative analysts said could reach up to $300 million.
Also, with oil prices falling, the state is getting less money than expected from severance taxes and mineral royalties, which could force midyear budget cuts.
Kleckley said he wants the state’s income forecasting panel to meet, likely in November, to review tax collections and determine what holes exist. He said some other tax collections may be stronger than expected, lessening the impact of the oil price slump.
“I don’t think anybody wants to put it off until the next administration. We just need to reconcile those final numbers,” Kleckley said. “I think that’s our responsibility to deal with.”