AP Wire

La. budget shortfall for this year $70M after tax increases

by Melinda Deslatte, Associated Press

Even with the tax hikes recently passed by lawmakers, Louisiana has a budget gap of nearly $70 million that remains to be closed in the next three months,

Photo by Robin May

Even with the tax hikes recently passed by lawmakers, Louisiana has a budget gap of nearly $70 million that remains to be closed in the next three months, a worse-than-expected shortfall that puts colleges and health services back on the chopping block.

Gov. John Bel Edwards and lawmakers had thought the shortfall for the budget year that ends June 30 was about $20 million or more smaller. But last-minute changes that lawmakers made to sales tax bills in the frenetic final minutes of a recently-ended special legislative session lessened their impact for this financial year.

The disappointing update was delivered Wednesday to the state income forecasting panel, the Revenue Estimating Conference, which revised its forecasts to reflect the additional money expected from the tax increases.

Edwards’ chief financial adviser, Commissioner of Administration Jay Dardenne, said the governor will start levying cuts soon to rebalance the budget, though he didn’t provide a specific timeline.

“We want to do it as quickly as we can,” Dardenne said. “We want to give everybody as much time as possible.”

The administration had hoped to spare public colleges and health services from additional reductions this year, but Dardenne said that’s unlikely with the larger-than-expected shortfall.

“We’re going to have to be looking to them to help make up that shortfall,” said Dardenne, a member of the Revenue Estimating Conference. “They are going to be having some additional cuts.”

State officials did get a bit of improved news for next year’s budget. The tax hikes passed by lawmakers are expected to raise more dollars than expected in the fiscal year that begins July 1, so a shortfall projected at around $800 million has dropped to $750 million.

Still, that would require deep slashing across state government to close such a hefty gap. Lawmakers on the House budget committee are planning to start their hearings on cut scenarios next week.

The Legislature can’t raise taxes in the current regular session, and talk already has started about a possible second special session on taxes to try to stave off cuts for the financial year that begins July 1.