Louisiana closed the books on the last budget year with a $313 million deficit, and state agencies and colleges are being asked to prepare for budget cuts of up to 10 percent of their state financing to close the gap.
Gov. John Bel Edwards' administration notified departments this week of the possible cuts.
"We advised the agencies that this is the number that we're going to have to deal with," Commissioner of Administration Jay Dardenne, the governor's chief budget adviser, said Thursday.
The Edwards administration hasn't yet decided how to deal with the shortfall, which is from the budget year that ended June 30 and driven in part by lagging business tax collections.
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Agencies have been asked to draw up scenarios for slashing 7 percent to 10 percent of their state general fund revenue. That's the money they get from general tax collections — not their fines, fees and other dedicated financing sources.
Dardenne said such a reduction would represent an across-the-board cut. He said the administration hasn't decided if that will be its approach to close the deficit, but he said agencies were asked to explain what such cuts would look like.
The Edwards' administration and lawmakers are looking at possible use of Louisiana's "rainy day" fund to close some of the gap. But cuts still will be needed.
"There will probably be some component of the rainy day fund that can be tapped, but not nearly enough to cover the entire amount," Dardenne said. "That's the only source of revenue that's immediately identifiable. But otherwise, we're going to be looking at cuts."
Lawmakers and the administration were expected to talk more about the deficit at Friday's meeting of the joint House and Senate budget committee. But planning for closing the gap already is underway.
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Veronica Mosgrove, spokeswoman for the Department of Agriculture and Forestry, said the agency was told this week to prepare for a cut of up to $2.5 million in its $74 million budget. She said that's equivalent to a 10 percent reduction to its state general fund financing.
"Right now we're working on what the impact would be to the department," Mosgrove said.
Similar comments came from other agencies.
"We have been notified, and we are prepping," said Jessica Ragusa, spokeswoman for Lt. Gov. Billy Nungesser's office.
The biggest hits in across-the-board cuts would befall colleges and health services.
LSU spokesman Jason Droddy said the university system was asked to determine how campuses would absorb a 7 percent state general fund reduction. Such a cut would top $24 million for the system.
"That gives us something to start working on," Droddy said.
A 7 percent state general fund cut to the state health department would reach $192 million.
The deficit from last year has to be closed in the current 2016-17 budget year. Dardenne said the deficit won't be officially recognized until November, a process that starts a clock giving the governor 30 days to outline a plan for closing the gap.
Louisiana has struggled through repeated budget shortfalls in the last nine years amid the national recession, the oil price slump and the continued use by former Gov. Bobby Jindal and lawmakers of short-term fixes to close holes. Lawmakers, at Edwards' urging, recently raised an estimated $1.5 billion in taxes to shrink cuts in this year's spending plan.