Louisiana’s budget gap widens; state entering into recession, economist says
Louisiana’s budget gap grew worse today, reaching a projection of about $850 million and placing government services at risk of deep cuts, with only four months remaining to rebalance the state’s spending plan.
The Associated Press reports the Revenue Estimating Conference, the state’s income forecasting panel, downgraded tax revenue projections, with economists saying collections across nearly all tax types are far lower than expected.
“We’ve got weakness in the corporate sector. We’ve got weakness in the personal income sector. We’ve got weakness in the sales tax sector. We’ve got weakness in the mineral sector,” says Greg Albrecht, the Legislature’s chief economist.
His assessment: “We’re entering what amounts to a state recession. And it’s come on pretty rapidly.”
The downturn, Albrecht says, is being driven by plummeting oil prices and the spill-out effect across the economy.
Next year looks even worse, with a more than $2 billion shortfall projected, The AP says.
But first, Gov. John Bel Edwards and lawmakers have to rebalance this year’s budget and close the $850 million gap before the financial year ends June 30.
Edwards is asking lawmakers to raise taxes in a special session that begins Sunday, Feb. 14 and ends March 9. The Democratic governor has announced he’s going to make his case for the tax hikes in a rare TV address to be broadcast statewide Thursday night.
The governor’s speech will air at 6:30 p.m. on Louisiana Public Broadcasting and on major television and radio stations around Louisiana. In a statement, Edwards says the state’s financial troubles are so severe that he decided he needed the rare televised speech to outline the problems to Louisiana’s people.
“Louisiana faces an unprecedented budget challenge that, if left unresolved, will devastate state government as we know it and impose unimaginable cuts to higher education, health care and other vital services the state delivers to our citizens,” Edwards says. “This is a fiscal crisis, the likes of which we have never seen.”
Public colleges and public health care services are threatened with the deepest slashing.
LSU President F. King Alexander sent a campuswide email shortly after the latest revenue projections were adopted, describing the situation as “troubling.” He says the type of possible cuts colleges face couldn’t be made “without dramatically impacting the services we provide to our students and our state.”
“I know these are troubling times, but be assured that we are working diligently to share our university’s value with state leaders. While the special session will be challenging, we have many legislators who have promised to continue prioritizing higher education—but they need to be reminded of how many people rely on LSU,” Alexander says.