State government needs to find $117 million more to cover bills already paid.
That number, which the Jindal administration released Friday morning, is just the deficit for the past fiscal year.
The shortfall in the $25 billion budget for the fiscal year that began July 1 is expected to be much larger. That number won’t be determined until Nov. 16.
Legislators then have to prepare for running state government next year with $713 million less.
Gov. Bobby Jindal is in Iowa campaigning for the GOP presidential nomination, lauding his stewardship of the state’s fiscal affairs.
Commissioner of Administration Stafford Palmieri, Jindal’s chief budget adviser, said the administration will balance the budgets from last year and this year before leaving office on Jan. 11.
“We’re working on that plan now,” Palmieri said in an interview after her staff delivered the news to the Joint Legislative Committee on the Budget. It’s her second week on the job. She stepped up from the governor’s staff to the high-profile job of commissioner, in charge of running the government day to day, when Kristy Nichols joined the private sector.
The state is required to balance its budget each year. But the time limits are such that the Jindal administration could just wait and foist the problems off onto the next governor.
Members of the legislative committee are concerned, saying the situation is dire. Several committee members raised the possibility that state workers might lose their jobs going into the Christmas season, but that’s still too early to tell for sure.
“Where else do we cut? What’s left?” asked Rep. Bryan Adams, the Gretna Republican who is vice chairman of the Appropriations Committee.
Jindal has sold assets, swept money from various funds and cut services, trimmed access to programs and applied accounting artistry to balance budgets that, year in and year out, have too little revenue available to cover expenses. Legislators discovered during the last session that those gimmicks have been used so often that little money was left, which is what led them to roll back breaks in the state taxes owed by businesses and increase the tax on tobacco products, in addition to cuts in spending that were not as deep as originally purposed.
“We have nowhere to go without having to make some significant cuts,” agreed Senate Finance Committee Chairman Jack Donahue, R-Mandeville.
Barry Dussé, director of the governor’s Office of Planning and Budget, told the legislative committee that the Governor’s Office already has imposed hiring and spending freezes, which should help.
Palmieri said the $117 million shortfall figure is a little misleading.
About $50 million was transferred from the state’s general fund to funds with dedicated purposes, which means that monies needed to recoup the losses are actually less. She also said a primary driver of the loss stems from having to pay more than the usual number of taxpayers cashing their refunds and credits, particularly in the film tax credit program.
That’s for fiscal year 2015, which ended June 30.
For fiscal year 2016, which began July 1, the state might need to generate several hundred million dollars more to keep up with spending.
The Revenue Estimating Conference, which is charged with setting that number, meets Nov. 16 to review receipts. It is expected that the panel will lower its estimate for how much money the state has available to spend, which would set off the need for another round of budget balancing.
The REC’s determination triggers a clock to bring spending in line with the new revenue estimates. The panel is composed of representatives from the Governor’s Office, the Louisiana House and the state Senate, along with an economist.
The price of oil is about $16 per barrel less than the price the state used to calculate how much money would be available to spend, which translates into roughly $200 million in revenue the state will not collect.
Legislative Fiscal Officer Greg Albrecht said collections of sales taxes and income taxes also are coming in lower than were anticipated when revenue projections for this fiscal year were calculated.
The REC’s determination will be submitted to the Nov. 20 meeting of the Joint Legislative Committee on the Budget, at which time Palmieri said the Jindal administration will submit its balancing plan for both shortfalls.
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