How deep is this year’s budget gap? Depends on what you want to include.
As lawmakers returned Sunday to the Louisiana Capitol to decide how to rebalance this year’s budget, Gov. John Bel Edwards is pegging the shortfall in the $25 billion spending plan at nearly $950 million.
But that assumes lawmakers agree to everything on the Democratic governor’s list — and that list has grown over time, as agencies that once had no public complaints about their financing say they now have shortfalls.
Settling on the figure means digging through a muddle of numbers. Agreeing on what to include could help decide how much lawmakers, particularly Republicans, are willing to consider Edwards’ push to raise taxes to protect state services from cuts. Public health care services and public colleges are most vulnerable to slashing.
Time is short.
Lawmakers gathered in a special legislative session, called by Edwards to deal with the state’s financial woes, must wrap up their work by March 9. And the state’s budget must be rebalanced before the fiscal year ends June 30.
The deficit recognized by the state’s income forecasting panel, the Revenue Estimating Conference, is $570 million. That accounts for the conference’s decision to downgrade estimates of what Louisiana is expected to collect this year from taxes.
Economists say collections across nearly all tax types are far lower than expected. The Legislature’s chief economist Greg Albrecht said Louisiana is “entering what amounts to a state recession.”
The downturn is driven by tumbling oil prices and the economic spill-out effect. Employment numbers are bad, wages are stagnant, and Louisiana’s giving out more in tax refunds to businesses so far this year than it’s collecting in corporate taxes, Albrecht said.
On top of slumping tax collections, former Gov. Bobby Jindal and lawmakers didn’t fully pay for all the programs they included in the budget and patched together some spending plans with dollars that haven’t materialized.
Rather than raise taxes or cut state spending to match its annual income, Jindal — backed by lawmakers — raided savings accounts, sold property and used other short-term fixes to pay for state expenses.
At least two gaps caused by those Jindal-era budgeting maneuvers have been known for months: a shortfall in the TOPS free college tuition program to cover all eligible students, a gap that has grown to $28 million; and a $250 million shortfall in the Medicaid program to account for increased usage of services and an increased number of recipients.
More recently, the Edwards administration said the K-12 public school financing formula is short $20 million because more students showed up than were used in budget projections. A similar situation emerged in the payments to sheriffs for housing state prisoners, which is estimated to be $3 million short. Those two areas often require midyear adjustments.
Over time, though, new shortfalls have shown up in other agencies that the Edwards administration is including in its figures.
The Edwards administration says that on top of the $570 million deficit recognized by the Revenue Estimating Conference, it has identified millions in budget shortfalls left by Jindal and lawmakers across agencies.
Included in the administration’s figures are nearly $19 million in cuts that were ordered in the budget, but that weren’t ever levied across agencies by Jindal. Also on Edwards’ shortfall list are gaps the administration says it’s found in the corrections, revenue, children and family services, juvenile justice and public health agencies.
No matter the specific figure used, the budget hole is wide and will be challenging to close. Taxes will be difficult for lawmakers, residents and businesses to stomach. Cuts before the budget year ends June 30 will be worsened by the four-month timeline to make them.
And the figure for next year’s budget shortfall is even higher, estimated to top $2 billion in the state financial year that begins July 1. Edwards wants lawmakers to make headway on closing that gap, too, by voting for tax increases in the special session.
Melinda Deslatte covers Louisiana politics for The Associated Press. Follow her on Twitter.com, @melindadeslatte