BATON ROUGE, La. (AP) — Only two months after a difficult budget-balancing session, state lawmakers Friday got their first official glimpse of the shortfall they already face for next year: $713 million.
News of a horizon filled with future budget gaps wasn't unexpected for the Joint Legislative Committee on the Budget.
The $25 billion budget for the fiscal year that began July 1 contains about $550 million in patchwork financing that isn't expected to be available a year later, accounting for much of the projected gap forecast for the 2016-17 budget year.
The shortfall also assumes inflationary increases in health care, retirement and salary costs that lawmakers don't always choose to fund.
Senate Finance Committee Chairman Jack Donahue said use of the piecemeal financing from a tax amnesty program, state surplus and agency reserve accounts helps keep the state from having to make deep cuts to public health care services and colleges.
"I think using one-time money under those circumstances is the right way to go," said Donahue, R-Mandeville.
Though the shortfall projection was steep, legislative leaders noted it was smaller than the $1.6 billion gap they had to close this year. Lawmakers were more immediately worried that this year's budget will have to be cut, to account for oil prices falling below state forecast.
While oil price declines are good for drivers at the gas pump, large dips in per-barrel price can wreak havoc on Louisiana's budget, which gets money from severance taxes and mineral royalties tied to energy production. For every dollar drop in the annual oil price for income projections, that's estimated to be about an $11 million hit to the state general fund.
This year's budget is built on a nearly $62 per barrel oil price.
"The price of oil is a whole lot less than that," said Sen. Ed Murray, D-New Orleans. "That puts the budget significantly out of balance."
Oil prices have recently hovered around the low-$40 range per barrel. Decisions on adjusting oil and gas revenue projections, however, aren't expected to be made until economists gather more data.
The state's income forecasting panel, the Revenue Estimating Conference, met Friday but didn't rework projections to address oil price changes.
Economists are awaiting more information across the state's various tax types to see if income taxes, sales tax or other revenue sources are performing better than expected and can make up some of the gap for sliding oil prices.
The income forecasting panel instead gathered to adjust the state's revenue projections to account for millions of dollars from fee hikes, tax increases and tax break scale-backs approved by lawmakers in the last legislative session to raise money for the state treasury.
Nearly $767 million in new revenue from the tax and fee changes was added to this year's forecast. The budget hole forecast for the following year comes even after assuming that $653 million will continue to be generated from those taxes and fees next year.