The severity of the budget problems facing John Bel Edwards as he takes over as Louisiana’s governor Monday cannot be overstated. The financial gaps are deep, widespread and grim.
The budget troubles could make one question why anyone would even want the difficult governor’s job ahead. The solutions are politically tricky, with decisions likely to be unpopular, and the road to passing them difficult at best.
As the incoming Democratic governor readies for his Monday swearing-in ceremony, the Edwards administration is trying to ready Louisiana’s people for the likelihood they soon could be paying more money to help the government cover its bills.
Edwards, his supporters and his newly named staff will take a brief reprieve in inaugural festivities. Then, they will continue work on a plan to try to end the perpetual state budget crises — while also selling lawmakers and the public on the approach they want to take, which is expected to involve some people and businesses paying higher taxes.
Not an easy assignment at all.
The nonpartisan Council for A Better Louisiana summed it up: “New governors have inherited big budget messes before, but you have to go back awhile to remember one as daunting as the one currently facing John Bel Edwards and the new Legislature.”
If that’s not enough, the governor enters office as Louisiana is threatened with Mississippi River flooding, caused by heavy rain and rising river water stages. Edwards is getting a crash course in hydrology, levee engineering and, if needed, disaster response.
At the moment, the budget’s the bigger disaster though.
“The situation is more dire than we thought it was,” Edwards’ chief financial adviser, incoming Commissioner of Administration Jay Dardenne, said at a holiday news conference outlining the new administration’s assessment of state finances.
“It’s not pretty,” Dardenne said.
The Edwards administration estimates the gap in this year’s $25 billion budget — which must be closed by June 30 — is in the range of $700 million to $750 million. Dardenne put it into perspective, saying that’s the size of all state financing for public colleges.
The shortfall estimate takes into account falling oil prices and less-than-expected collections in state corporate and sales taxes. Also, it includes estimates of gaps in the Medicaid program, the Taylor Opportunity Program for Students and the prisoner housing program, where exiting Gov. Bobby Jindal and lawmakers didn’t include enough money to pay anticipated costs.
The projected shortfall for the upcoming 2016-17 budget year that begins July 1 is more than double this year’s gap.
Dardenne said it could reach as much as $1.9 billion, though Edwards and lawmakers could whittle away at next year’s problem if they make permanent changes to fix this year’s budget shortfall.
At least $880 million of that problem, Dardenne said, is because Jindal and lawmakers used patchwork, one-time fixes to piece together this year’s budget. Those dollars won’t be available next year.
To close the immediate budget gap will be complicated. The window for making cuts is small, and tax changes often take months to roll out, so the dollars don’t start pouring into the state treasury quickly enough for short-term problems. In addition, the Democratic governor will have to find solutions that a majority-Republican Legislature will agree to support.
Talk has started of possible furloughs of state workers, sales tax hikes, cigarette tax increases, delays of tax refunds and other difficult options.
Edwards hasn’t committed to any ideas. The incoming governor said he’ll soon start outlining possible budget fixes and tax proposals for lawmakers to consider.
“When you see the menu of options, we’re not intending to do necessarily all of those things, but we have to put together the right mix, both that enjoys the support necessary to get them done but also that fixes the problem,” Edwards said.
Edwards and Dardenne insist they aren’t making the financial gaps seem worse to get support for scaling back tax break programs or increasing taxes.
“This is not playing Chicken Little here,” Dardenne said.
Edwards said his administration is giving people “the factual scenario.”
That doesn’t make finding solutions any easier.
Melinda Deslatte covers Louisiana politics for The Associated Press.