La. leaders delay decision on size of state's budget shortfall

La. leaders delay decision on size of state's budget shortfall
Source: WAFB
Source: WAFB
Source: WAFB
Source: WAFB

BATON ROUGE, LA (WAFB) - Louisiana's top state lawmakers have put off a decision identifying just how big the budget shortfall is for this fiscal year, delaying a vote until at least January of 2017.

House Speaker Taylor Barras, R-New Iberia, refused to accept budget estimates from two state economists, suggesting the shortfall for the current fiscal year could be anywhere from $257 to $464 million. That fiscal year ends at the end of June. Governor John Bel Edward's budget chief, commissioner of administration Jay Dardenne, expressed frustration by the delay, saying it was "irresponsible."

"The bad news is here, it is upon us," Dardenne said, calling for the estimates to be approved.

Both Barras and Dardenne are members of the state's Revenue Estimating Conference (REC), which is tasked with approving projections from economists on how much money taxes are generating. Those estimates are used to determine, for instance, how much needs to be cut to balance the budget. Any vote by the committee must be unanimous.

LSU economist and REC member, Jim Richardson, also wanted to delay a decision on the shortfall. Senate President John Alarion, R-Westwego, meanwhile joined Dardenne in calling for approval of the deficit estimate.

By forcing the committee to kick the can down the road, Barras avoided forcing House members to vote on more cuts in the coming month. If they did not make cuts within the 30-day window, they could have been forced into a special session. Instead, Barras said he wanted to wait until next month's REC meeting, hoping that projections for tax revenue may improve.

"If it's $40 million less that we have to adjust the budget for, that's good news," Barras said.

However, economists did not express confidence that things will dramatically improve over the next month, meaning more cuts will have to happen. Dardenne said putting off a decision would only make things worse for state agencies.

"A delay of just a month puts us another month behind in trying to tell agencies what they need to do to deal with this reality," Dardenne said. "What we're doing today is just turning a blind eye to reality."

Greg Albrecht, chief economist in the Legislative Fiscal Office, said the projected multi-million dollar shortfall was largely the result of corporate taxes and individual income taxes generating less money than anticipated. Albrecht pointed to unemployment in Louisiana as part of the problem.

"We've got a weakness in the underlying economy that's still there," Albrecht said. "We're still losing jobs every month, year over year."
In the aftermath of the flood, Albrecht said the sales tax has seen a boost as people have worked to rebuild and get back into their homes. However, Albrecht warned this will not last forever. In addition to the budget shortfall for this year, the state still must wrestle with a $313 million budget hole left over from last year.

Lawmakers will likely vote on cuts to fix that budget shortfall later this week.

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