La. budget gap officially smaller; lawmakers split on what to fund and what to do next

BATON ROUGE, LA (WAFB) - For months now, Louisiana has been barreling toward the fiscal cliff, slated to hit when temporary taxes fall off the books in July.

Originally estimated at about $1 billion, as of Thursday, that budget shortfall is now officially somewhat smaller after a panel of top state lawmakers and economists pegged the gap at around $650 million.

The Revenue Estimating Conference (REC) is in charge of projecting how much money is flowing into state coffers. Thursday morning, they recognized $346 million in additional revenue for the fiscal year 2018 - 2019.

"I'm happy there's at least some extra money," said Senate President John Alario, R-Westwego, who is a member of the REC. "It's not enough, but I'm happy to see we're going in the right direction."

The new influx of dollars was anticipated by most lawmakers. It is, in large part, the result of the recent tax overhaul in Washington. In Louisiana, people can deduct their federal income taxes paid from their state taxes. As federal taxes went down as a result of the rewrite, the amount people paid the state increased.

The next question is how to split up the additional revenue. With the state still $650 million short, lawmakers have to choose their priorities. That fight is already beginning.

"A high priority for a lot of folks is certainly higher ed, including TOPS," said House Speaker Taylor Barras, R-New Iberia.

"Hopefully, they'll put more money back into TOPS so the children know there's some decent and adequate funding. Hopefully, they'll spread out some of the rest of it to healthcare where it is most needed," Alario argued.

The governor is also weighing in. He would like to use the funding to shield state colleges from cuts, while also putting more funding toward healthcare, drug rehab, safety net hospitals, and more.

Under the governor's proposal, TOPS would get an additional $50 million boost compared to his worst-case budget proposal. However, that would still leave it $183 million short - less than half-funded. That proposal is likely to face pushback in the House, where many lawmakers would like to see it fully-funded.

There is also a question as to what will be done about the remaining $650 million gap. Alario fears state programs would be put in jeopardy and believes another special session is necessary.

"There will still be a hole in funding some more of higher education, taking care of healthcare in this state, state police, things that are crucial to people in this state," Alario said.

That is a sentiment echoed by the governor. In a statement, Gov. John Bel Edwards said he will not sign a budget with $650 million in cuts. He wants lawmakers to end the regular session early and call an immediate special session.

"While this is a positive step forward, it does not completely solve our problems," he said.

But the House Speaker was less committal. While he expressed concerns about making $650 million in cuts, he also would not immediately say he wanted another special session.

"I think there are some members that do feel strongly that maybe a session wouldn't be necessary and they could live with the cuts," Barras said.

Next week, budget discussions kick into high gear, with the debate expected to make it to the House floor by Thursday.

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