Article archive / February 1, 2016
Originally published: . Volume 7, No. 2. Source pages: 1, 3.
The state faces a $1.9 billion deficit for the 2016- 2017 fiscal year and a current state services shortfall of $750 million, the Governor’s Office said in a January 19 press release. The Governor says he will call a special session this month to begin dealing with the state’s bleak financial outlook.
“There are considerable reasons to believe the numbers will get worse,” the new Governor, John Bel Edwards, said in press conference after the Joint Legislative Committee on the Budget met last month.
“I don’t have a handle on how much worse,” Edwards said, indicating that the shortfall for state services was “bare bones” and not due to inflated numbers.
The continued economic crisis in the state is considered by most to be related to the historic low price for crude oil and Louisiana’s dependency on that price.
With oil tumbling from $125 a barrel in 2012 to as low as $37 this past December, the network of oil and gas revenues, oil industry jobs, and slowed production, is taking a toll many did not expect.
“This is not the budget plan I want to bring in my second week in office, but these problems are bigger than our state has ever seen,” Gov. Edwards said in a January press release.
“The challenge before us is one we must address collaboratively and comprehensively in order for our state to prosper again. The sharp drop in oil prices, while significant, only contributes to a fraction of the problem our state faces. What I offer is a responsible plan to stabilize our state’s budget shortfall and minimize severe cuts in the next three months that would deeply hurt our citizens, hospitals, public schools and universities.”
Gov. Edwards will call the legislature into a three-week special session this month to address the crisis, his office said.
For the short-term, the Governor provided a list of revenue options identified to cover the $750 million budget hole left in the last six months of this fiscal year. The options for the current fiscal year include using the state’s Rainy Day Fund and redirecting some BP oil spill payments to the state.
The Governor will also recommend cutting 10 percent from discretionary state funds. Governor Edwards told each of his cabinet members to submit proposals for a minimum 10 percent reduction.
Longer term solutions may include changes to income tax brackets, cuts in federal income tax deductions, and raising the tobacco tax. Sources have also talked about an increase in sales taxes, a tax on telephones, and an increase in internet sales taxes.
“It is now more important than ever for our state’s leaders, citizens, and stakeholders to come together to solve this problem. The last eight years of bad budgeting and annual cuts to vital services have left us in a fragile position. There is no sugar coating that fact,” Gov. Edwards said.
“We must fix this or continue catastrophic cuts that would result in our hospitals closing, universities and community colleges filing for bankruptcy, the erosion of the TOPS scholarship program and severe reductions to our public K- 12 schools. We can do better for our working families, students and businesses than we have in the past. My administration welcomes all constructive engagement in this process. Together we will meet this challenge, stabilize our budget, and build a solid foundation for our state’s future.”
The Public Affairs Research Council of Louisiana (PAR), an independent research group, recently wrote, “Higher education is about to endure its worst-ever single-year cut in overall financing, and that’s according to the best-case scenario,” PAR officials noted.
If the Louisiana Legislature does not raise taxes over the next couple months, a cut of $131 million will come out of the budget for higher education before June 30th, with the bigger cuts going to those with more funding, according to Jay Dardenne, the Governor’s chief budget architect.
In a January 26 response, higher education officials listed proposed cuts at each university, warning that some cuts are large enough to bankrupt certain programs, and completely change the way the universities function.
The state will also face serious shortfalls in state healthcare funding, which some say will be helped by federal money for Medicaid expansion, at least initially.
This article is part of a historical newspaper archive. Read the original issue for its original layout, photographs and graphics.