Economists have warned the state could close the books for the current fiscal year with a deficit as large as $200 million.
Also, Gov. John Bel Edwards' administration says Louisiana might have to take out a short-term loan to keep cash flowing and government services operating until taxes are collected.
The Revenue Estimating Conference — which creates the income forecasts for state tax, license and fee collections — met on Thursday to adjust the state's income projections to account for the $263 million in taxes raised in the just-ended special session. The group also updated revenue forecasts with new fee hikes passed in the earlier regular legislative session.
Total adjustments added up to about $371 million.
Adding a level of uncertainty, the Legislature's chief economist Greg Albrecht noted that the impact of some of the approved tax increases and reworked tax breaks were indeterminable and, therefore, not included in the new forecasts.
"We have upside potential," Albrecht said. "And we have downside risk as well."
The tax hikes did not spare state agencies from budget cuts. The budget going into effect on Friday includes reductions to K-12 public education, the TOPS college tuition program and corrections programs.
State agencies are also being urged to keep in mind the size of a potential deficit from the current budget carrying over to the new financial year.
The deficit for the 2015-16 budget could be as much as $200 million, but Albrecht said until the books for that period are officially closed in the fall, the exact size of the gap is unknown. The governor has asked agencies to set aside 5 percent of their budget allocation in reserve in case midyear cuts are required to close a deficit.
The Edwards administration, the treasurer's office and legislative leaders also are in talks about the possibility Louisiana may need to take out a short-term loan in September to pay bills in the new budget year.
The state usually borrows from its own savings accounts until tax collections, fees and other payments roll in to the treasury. But former Gov. Bobby Jindal and lawmakers raided many of those accounts to patch together prior budgets, leaving the state with fewer reserves for short-term borrowing.
"We're in a real upside-down position," said Commissioner of Administration Jay Dardenne, Edwards' chief budget adviser.
First Assistant State Treasurer Ron Henson said local governments regularly use short-term borrowing options to finance services as they await tax collections. The last time state government took out a short-term loan to pay for operations, however, was thirty years ago.