PAR says Louisiana’s budget crisis ‘even worse than many thought’

The Public Affairs Research Council of Louisiana has analyzed the state’s budget crisis and in a commentary released today the organization says the situation is perhaps even more dire than most believe.

“Just about everyone knew the budget situation was bad,” the commentary reads. “PAR’s deeper look at the budget holes and tenuous patchwork unfortunately show it to be even worse than many thought.”

In the legislative session that began on Monday, lawmakers must find a way to close a $1.6 billion budget gap. The PAR commentary says Gov. Bobby Jindal’s plan to fill the gap “leaves a number of holes that, if not filled, will likely lead to mid-year budget shortfalls and other financial strains.”

PAR says “the shortfall is exacerbated primarily by the fact that this year’s budget was made whole with about $1 billion in sources of revenue that are not necessarily available for the fiscal 2016 budget-balancing act.” Those sources include trust fund depletions, a debt defeasance maneuver, a lawsuit settlement, fund sweets, a tax amnesty and other short-term fixes.

“The more we’ve balanced this way, the more we have to keep balancing this way,” PAR says.

PAR identifies more than $300 million of unfilled budget holes and more than $700 million in state resources that it says should be on the negotiating table to achieve a balanced budget. It recommends the Legislature look at reducing spending on—or completely eliminating—mandatory or recurring spending programs to fill the gap.

“These cuts in state government could be matched with reductions or eliminations of some tax credits or exemptions,” PAR says.

While there are a lot of uncertainties at this point in the new session, PAR concludes a few scenarios look likely as lawmakers work to fill the budget gap.

“Higher education is about to endure its worst-ever single-year cut in overall financing, and that’s according to the best-case scenario,” the commentary concludes. “The state will face mid-year budget shortfalls for health care services.”

Read the complete commentary. You can also check out a PAR guide released earlier this month on the budget crisis and how the state’s finances got to this point.

—Steve Sanoski

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