Edwards plans special session to close deficit topping $300M
BATON ROUGE, La. (AP) — Gov. John Bel Edwards said Friday he intends to call a special legislative session to rebalance the state budget after Louisiana’s midyear deficit was projected to reach $313 million.
The state income forecasting panel, known as the Revenue Estimating Conference, downgraded Louisiana tax collection estimates to account for unemployment that is dragging income, business and sales taxes below expectations.
The Democratic governor said the action “clearly indicates the need for a special session,” expected sometime next month, to make cuts and consider using Louisiana’s “rainy day” fund to close the gap in the $27 billion state operating budget.
The session is expected to fall in mid-February, between Valentine’s Day and Mardi Gras.
Republican House Speaker Taylor Barras showed resistance to the idea, suggesting the budget could be rebalanced without the full Legislature returning to Baton Rouge.
“It’s not inevitable that we have a special session. We could accomplish the cuts without one,” said Barras, R-New Iberia. But he said if the governor calls the session as expected, “we will be there.”
Edwards said constitutional limits on the governor and the joint legislative budget committee’s ability to slash spending would make cuts fall too heavily on public colleges and health services for the poor, elderly and disabled. A special session, he said, would allow lawmakers to cut more broadly across programs and agencies.
“I am not willing to place the burden of this budget crisis only on the backs of our hardworking families, students or our most vulnerable citizens,” said Edwards, who was leaving Friday for a weeklong trip to Rome.
If lawmakers agree to use the rainy day fund, that could provide $119 million to offset a portion of the gap, but a $194 million gap would remain.
“The entirety of the state’s budget must be opened up in order to make these cuts, otherwise they will be concentrated in a few areas and the impact would be too painful for our people to bear,” Edwards said in a statement.
Senate President John Alario, R-Westwego, said he also prefers a special session to lessen the cuts that fall on higher education and health programs.
Even with the ability to spread the slashing, Alario said of the cuts: “I think there’s going to be a lot of pain.”
The four-member Revenue Estimating Conference dropped the state’s official income forecast by $340 million for the current budget year that ends June 30. With other financial adjustments, the deficit is expected to be about $313 million.
It’s the state’s 15th midyear budget gap in nine years. Last month, Edwards and lawmakers closed a more than $300 million deficit from the last financial year with savings from hiring and spending freezes, postponed Medicaid payments and cuts to colleges.
Economists said the latest shortfall stems from a downturn in Louisiana’s economy and an unemployment rate that is third in the nation. Even an uptick in oil prices, which means more severance tax revenue for the state, isn’t enough to offset the worsening forecast for personal income, business and sales taxes.
“We are still losing jobs on a monthly basis,” said the Legislature’s chief economist, Greg Albrecht.
Louisiana has seen declining employment since August 2015, according to data presented to the conference, with the greatest job losses coming in the oil and gas, manufacturing and other high-wage sectors.
Against the wishes of the Edwards administration, the estimating conference delayed its official shrinking of the state’s income forecast last month. Barras said he hoped the state’s tax collections would show improvement. Instead, the projections worsened over the period.
The forecasting panel dropped income estimates for the upcoming budget year as well.
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