When the Louisiana Legislature left the State Capitol in June, the best guess was that it would return in early 2016 facing about a $500 million shortfall — based on the one-time money and budgetary gimmicks that were used to balance the current fiscal year’s budget.
That money would somehow have to be made up, a particularly difficult task given that most of the cutbacks on business tax breaks were temporary ways to fill the budgetary gap. The best that could be said about the result is that deeper cuts were avoided in higher education and health care, and some new permanent revenues were generated by a modest increase in the cigarette tax and a few other levies and fees.
Now, already, the experts are looking at worse news than expected.
The Revenue Estimating Conference, a panel of state officials and LSU economist Jim Richardson, oversees the budget statistics that lawmakers have to work with. The REC’s initial estimate of the shortfall facing lawmakers next spring is $713 million.
Some of that is calculated based on inflation, which adds to the costs of state government like everything else. The Legislature typically just tells state departments to suck it up and find ways to work within today’s relatively low rate of inflation.
But today’s budget contains about $550 million in patchwork financing. And lawmakers noted that oil prices remain depressed, below the official state forecast. That hurts state revenues. And to the extent that business slows in the oil patch, sales and income taxes might be affected.
Gov. Bobby Jindal ordered a state hiring freeze, except for critical public safety and other jobs, as a way to cushion the current budget against falling revenues. The revenue increases from suspensions of tax breaks and exemptions are estimated, so it’s not at all impossible that the state will see a midyear budget cut, again, if those revenues don’t come in as planned.
After that, though, the budget year that begins on July 1, 2016, is going to be a bear to balance.
If anything, the years of Jindal robbing from trust funds and cutting state aid to universities means that balancing the next budget is getting harder, not easier. He’s taken all the “easy” money.
“Most of the tax measures we passed this year are sunsetting in three years, so they’re going away,” state Sen. Neil Riser, R-Columbia, told the Monroe News-Star about the new budget numbers. “Now we have to look at true permanent reform by examining all of the tax credits, rebates and exclusions that exist.”
We agree with Riser, but legislators facing the voters in the October primary better come up with a better explanation for their performance than “we just did what the governor wanted.” That mentality led to a budget that is so seriously out of whack that the new administration is going to face significant challenges, likely even greater than those of this year.