Legislators must trim $211 million
State government must cut expenses by $211 million within the next few weeks because of unexpected drops in revenue.
The Revenue Estimating Conference — which decides how much money the state can spend — revised the state’s financial forecast Tuesday night after listening to economists’ projections.
The state operating budget that funds schools and other public services is based on those projections. When they fall short, extra money has to be found or spending has to be cut.
“The problem isn’t just too high of a forecast. The problem is the economy,” said Greg Albrecht, chief economist for the Legislative Fiscal Office.
Albrecht said the underlying economy is weaker than it is being reported to be. It’s an assessment to which Gov. Bobby Jindal disagrees.
Revenue dips also are creating problems in the proposed $25.5 billion state operating budget that the Legislature is in the midst of crafting for the fiscal year that starts July 1.
For the upcoming year, the panel of four state officials dropped the revenue projections by $304 million.
Income tax collections are failing to meet economists’ projections amid the lingering effects of the national recession.
Albrecht said economists were wildly optimistic about personal income tax collections, which he recommended dropping by $211 million in the current fiscal year.
Other revenue sources, such as severance taxes, are expected to grow but not by enough to account for what is likely to diminish.
State officials said cuts will have to be made to resolve the problems.
“I brought my power saw back this week when I came,” joked state Rep. Jim Fannin, D-Jonesboro and chairman of the House Appropriations Committee.
While other legislators flocked to social events, Fannin was among a group of state officials who spent the evening poring over economists’ projections for the current and upcoming fiscal years. Handfuls of legislators, lobbyists and legislative aides attended the meeting to learn the magnitude of the state’s financial problems.
The drop in revenue in the current year likely is to hit state agencies hard because so few weeks are left until the books are closed for the fiscal year on June 30.
Commissioner of Administration Paul Rainwater, the governor’s top budget aide, said state agencies already are aware of the financial problems.
“Obviously, we’re going to have to make reductions,” Rainwater said.
The governor tried to strike a positive note during a news conference after the meeting concluded.
Jindal said Louisiana’s economy is performing comparatively well.
“Obviously, we’re going to work with the Legislature to make sure we have a balanced budget,” the governor said.
Jindal’s positive spin on the state’s economy conflicted with the conversation at the Revenue Estimating Conference meeting.
Fannin said the state just is not meeting the revenue forecasts.
“Things have not panned out nearly like we would have expected,” Albrecht said.
State budget bills are expected to start moving next week after being stalled in the House Appropriations Committee for the first part of the session.
Earlier in the session, the public asked legislators to find more money for the developmentally disabled and to reverse the governor’s decision to privatize an Avoyelles Parish prison.
Now the focus will be on how deeply areas such as higher education and health care will be cut.
“How can you keep anybody protected from cuts?” Fannin said after hearing the revenue projections.
State budget problems are surfacing as a huge issue as this year’s legislative session passes the midway mark. The governor pushed his education package through early in the session amid protests from public school teachers across the state.
Legislators began the session with a proposed state operating budget that dealt with a nearly $900 million shortfall in the dollars needed to keep state government services at their current levels.
Changes to the governor’s pension package were expected to widen the budget gap.
Forced to make changes in his proposals concerning state employee retirement, the governor now most deal with some of the savings he expected to reap from those alterations not materializing. Jindal said that $80 million problem will be resolved through bond savings driven by lower interest rates.
Still to be determined is how the other budget holes will be erased.
“We’re going to have to set real priorities as a state,” the governor said.
BY MICHELLE MILLHOLLON
Capitol news bureau
April 26, 2012
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