With an estimated more than $1 billion budget shortfall, the state will need to evaluate where to cut spending in 2015.
As Louisiana lawmakers gear up for the legislative session this spring, the top issue to be dealt with is the state’s staggering budget shortfall, estimated to reach $1.6 billion in 2016.
This deficit is largely a product of falling oil prices, which Greg Albrecht, chief economist for the Louisiana Legislature, predicts will remain low for the next several years.
Gov. Bobby Jindal has already cut state spending significantly, in part because of the weaker oil market, but further action must be taken. Closing the budget gap will be a tall order for the Louisiana Legislature, but with the state’s balanced budget requirement, the money must come from somewhere. Out of the current year’s full state budget, less than $3 million is discretionary, the majority of which is funding allocated to healthcare and higher education.
“Higher education and healthcare are always the first budget areas to be cut when the budget is tight because the funds are not dedicated,” says Dawn Starns, NFIB/Louisiana state director.
The higher education budget, in particular, has already seen steep cuts since 2008.
While the legislative session doesn’t begin until April, Starns says there are already a number of issues being discussed. Proposals could include rolling back the tax incentives the state gives to the oil and gas, film and other industries, as well as tax increases. Reaching consensus, however, will be another challenge.
“The governor has said he won’t support anything that looks like a tax increase,” Starns says. “Legislators are saying everything is on the table.”
While there are no specific proposals yet, NFIB/Louisiana will be closely monitoring the issue and all specific proposals—particularly those that may raise taxes for small businesses—as April’s session approaches. Starns says more information may be available in late March.
