La. economists project COVID-19 will cause nearly $1B shortfall in state’s budget
BATON ROUGE, La. (WAFB) - Louisiana lawmakers will have around $843 million less to spend as they begin crafting the state’s operating budget for the fiscal year beginning July 1.
The Revenue Estimating Conference adopted the bleak economic outlook Monday, May 11. State economists say the reduction in revenue is driven by plummeting oil prices and skyrocketing unemployment, both related to the Coronavirus Pandemic.
"There’s no crisis we’ve had that even comes close to this,” state economist Greg Albrecht said. “This is a Katrina-sized downgrade in the forecast... except without the boom that came after the hurricane.”
Lawmakers must balance the state’s budget, meaning they need to plug the budget hole if they do not want to cut state services. Higher education and health care would be first on the chopping block.
Legislative leaders and Gov. John Bel Edwards say they do not intend to raise taxes. Some republican-backed measures to cut taxes are zooming through the legislative process, though they would widen the budget hole if they become law.
Louisiana already has $1.8 billion in Coronavirus aid from the federal government, though it’s unclear how much of that money could be used to close the budget gap. The money is earmarked to reimburse costs incurred during fight against the pandemic, not to replace lost revenue.
“Depending on how much we can offset, we’re still looking at reductions, no question about it,” Commissioner of Administration Jay Dardenne said. “We’re going to have some budget cuts - the severity of which we’re just not sure of yet."
Dardenne will present a new spending plan to the legislature in the next two weeks which will outline the state’s plan to mitigate cuts.
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