State budget debacle only just beginning

How will lawmakers deal with a $1.4 billion budget hole next year?

For starters, Commissioner of Administration Kristy Nichols said that the current spending and hiring freezes in place could either be expanded or simply continued into the next fiscal year.

“That is a possibility,” Nichols said.

Either way, it probably won’t be enough to protect higher education from what could be its most treacherous session in recent memory. That’s because funding for higher education and health care, about one-third of the budget and the most accessible for cuts, may be treated differently than in the past.

Constitutional amendments approved by voters last month will help protect Medicaid money and remove some health care sections from the cutting board.

That also makes the budget situation even bleaker for the next governor, when they take over in 2016. Lawmakers, meanwhile, are on the 2015 ballot, too, and that will certainly factor into their votes during the spring session.

But the field running for governor should be ready to address the situation soon, politicos say, and the victor should be prepared for a tough honeymoon period once elected and sworn in.

“Anyone running for governor may as well face up to it,” said Dr. Jim Richardson, a member of the Revenue Estimating Conference and an economist at Louisiana State University. “Their first year will be hard. There won’t be any buckets of money or pockets of cash left over to patch the holes. They need to figure out how to spend and how to have sufficient funds on a sustainable basis.”

There are some long shots, like a new Internet sales tax. According to Greg Albrecht, the state’s chief economist, the state is losing out on anywhere between $250 million to $800 million by skipping taxes on online sales, depending on the study you want to believe.

Even though Gov. Bobby Jindal opposes taxes in all forms, creating a new Internet sales tax would mean a “material increase in taxes,” said Albrecht, adding, “On the federal level efforts to address this are slowing down.”

That’s why, reports Bloomberg, a dozen incumbent and newly elected governors are calling on Congress to allow states to collect an Internet tax on purchases. Jindal is not among those pushing for the authority.

Additionally, in Lake Charles, a $700 million new casino is in the process of opening up with hundreds of new jobs. It could provide a nice bump in gaming revenues for the state. “But will it grow the market or cannibalize it?” asked House Speaker Chuck Kleckley, R-Lake Charles.

Despite questions over its validity from Treasurer John Kennedy, Commissioner of Administration Kristy Nichols told LaPolitics that the $178 million surplus identified by her office can still be certified in January by the Revenue Estimating Conference, whether as an actual surplus or something else. If so, it can be appropriated by lawmakers for the 2015-16 budget.

How the administration transforms the non-recurring money into recurring revenue for the budget is another question, but they’ve managed to do it in the past using pass-throughs and other tactics.

“It’s going to be a real challenge because so much of the projected deficit will have to be replaced with real dollars,” said Albrecht.

 

About Jeremy Alford 212 Articles
Jeremy Alford is an independent journalist and the co-author of LONG SHOT, which recounts Louisiana's 2015 race for governor. His bylines appear regularly in The New York Times and he has served as an on-camera analyst for CNN, FOX News, MSNBC and C-SPAN.

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