State has $197 million budget deficit

The latest state revenue forecast adopted today dropped income estimates by another $197 million this year, leaving the state with a midyear deficit to close.

Economist Greg Albrecht, with the Legislative Fiscal Office, says sales tax revenue has plummeted, and the uptick in severance and royalty money from oil prices isn't enough to combat the sales tax drop.

Division of Administration Commissioner Angele Davis said the reduction forecast would trigger cuts in spending to balance this year’s budget to $7.8 billion from $8.06 billion. That’s the money that state sources contribute to the annual $28.9 billion budget, she said.

The latest forecast was approved by the Revenue Estimating Conference.

Louisiana House OKs state budget; eliminates merit increases and cuts state jobs

The Louisiana House approved a $27 billion budget proposal Thursday that eliminates state employee merit pay raises and also includes large cuts to public colleges, health-care services and government jobs to cope with a steep drop in state revenue.

More than 3,600 state jobs would be cut, and about two-thirds of those job reductions would be layoffs.

The House agreed to the spending plans in an 87-17 vote after seven hours of debate, going through the 291-page bill department by department. Most attempts to make changes were defeated.

As they spoke against the budget, a handful of lawmakers lodged complaints about Gov. Bobby Jindal's stance against tax increases to help fill budget gaps and the Jindal administration's opposition to most of the amendment proposals.


The budget heads next to the Senate for debate, where the Senate Finance Committee is scheduled to begin hearings Monday. The 2009-10 spending plan would shrink from a $30 billion budget in the current fiscal year.

A large slice of the reduction is tied to the loss of one-time federal hurricane recovery dollars. The state also faces an estimated $1.3 billion drop in state general fund revenue, thanks to the recession, plummeting oil and gas prices and a slew of large tax breaks approved recently by lawmakers.

No statewide election funds budgeted

Secretary of State Jay Dardenne is discouraging lawmakers from enacting any proposed constitutional amendments during the 2009 regular legislative session. This is because, he says, there is no money for a statewide election this year.

No regular statewide election is scheduled for this fall. So, Gov. Bobby Jindal’s proposed state budget for the fiscal year that begins July 1 does not include the nearly $6 million in state funds needed to conduct one.

“If we are required to have one, we don’t have that budgeted,” said Dardenne on Thursday. “That would cause some very serious (budget) problems for us.”

Dardenne also advised the House Appropriations Committee that the state elections agency will be operating on $21.8 million in federal stimulus money that will go away in two years.

State Lawmakers brace for upcoming budget cuts

State officials expect to be short $1.3 billion to keep funding at the current level in the spending year that starts next summer.

After several flush years, legislators suddenly are faced with a downturn in the state’s finances.

George Silbernagel, chief budget analyst for the House, said income tax revenue is no longer the lone “boogieman” in the state’s financial outlook.

Legislative Fiscal Officer Gordon Monk said the thinking was the state would be fine for the current fiscal year if oil prices stayed in the low $70s. Oil is dipping below $60 a barrel, he said. “Clearly, there are concerns,” Monk said.

State Warns of Lean year Ahead

Gov. Bobby Jindal's chief budget adviser has warned her Cabinet colleagues to prepare for a 30 percent cut in discretionary spending next year, and suggested that reductions could begin soon with the state facing a projected shortfall of $1.3 billion in the 2009-10 fiscal year.

To mitigate the impact on next year's budget, which will be presented to lawmakers in March, the administration has been holding a series of meetings at which department heads have been asked to identify where money can be saved and whether any the savings could be implemented in the current fiscal year.

The sobering news comes after three years of strong economic growth in Louisiana, fueled by record energy prices and post-hurricane reconstruction activity, which has produced a string of budget surpluses. But the national economic slowdown, combined with a leveling off in the energy sector, has led forecasters to predict that 2009-10 will be essentially flat.