State budget must be cut by $341 million
BATON ROUGE – After the state income forecasting panel shrank its revenue estimates Monday and projected the deficit, Louisiana’s nearly $30 billion budget must be cut by $341 million this year to stay in balance.
The problems grow worse in the next budget year that begins July 1, when the state will bring in $1.2 billion less in state general fund revenue than it has to spend this year, according to the forecast adopted by the Revenue Estimating Conference.
With oil prices down to a third of what they were only months ago and amid a national recession the results were somewhat unsurprising. Some officials worried the financial picture will worsen further next year.
“We don’t know where the bottom is yet,” said Rep. Jim Fannin, D-Jonesboro, chairman of the House Appropriations Committee.
The major factor in the state’s financial woes can be attributed to the rapid drop in oil and gas prices. Another factor was the rapid drop in car and truck sales meaning less vehicle sales tax revenue for the state.
2009’s problems hinge on three issues: the sizable drop in energy prices, the national economic downturn hitting sales and income tax collections and a series of tax cuts approved by lawmakers when the state had several years of hefty income increases. For example, in the last two years, lawmakers approved personal income tax breaks that will cost $730 million next year.
However, the $341 million deficit for the current 2008-09 budget year that ends June 30 is the immediate problem.
Jindal has one month to address the deficit. He can cut a portion of state spending on his own, but that won’t cover the full amount. He’ll need approval from the joint House and Senate budget committee to slash spending to address the rest of the gap.
“Just like in families and small businesses, state government has to live within its means. That means we will have to reduce government spending to a level we can afford,” Jindal said in a statement.