State Legislature

La. revenue panel shrinks budget gap outlook to $648 million

BATON ROUGE, La. (WVLA / WGMB) - A $346 million revenue windfall will shrink Louisiana's budget gap for the upcoming fiscal year, the state's income forecasting panel projected Thursday.

The Revenue Estimating Conference tagged the state shortfall at $648 million, lower than its previous estimate of $994 million. The updated number acknowledges $309 million in state income taxes, after Congress passed federal changes late last year.

State leaders welcomed the reduced gap projection, saying it will help keep some critical programs funded in the budget year starting July 1.

"This is welcome news that we have been expecting for some time," said Gov. John Bel Edwards. "These additional resources will certainly help to soften the cuts from the fiscal cliff in a number of important areas."

The shortfall is anticipated amid the expiration of temporary taxes on June 30.

The new forecast will lend some relief to the so-called doomsday budget Edwards unveiled in January, which included reductions to public-private hospitals and an 80 percent cut to the TOPS tuition aid program.

"If we've got the opportunity to lessen the impact of the fiscal cliff on the people of Louisiana, we're going to take it," the governor said Thursday. "While this does not solve our problems, it does help."

After the panel meeting, state leaders were quick to suggest where the newly acknowledged funds should go.

In an email release, Edwards recommended giving additional money to sheriffs, district attorneys and corrections offices, as well as substance abuse, mental health services and senior centers. Partner hospitals in New Orleans and Shreveport would also receive a greater piece of the budget, under the governor's proposal. Roughly $50 million would go to TOPS, which would still leave the program $183 million short of being fully funded. Another $10 million would go to the need-based Go Grant program.

House Speaker Taylor Barras (R-New Iberia) said TOPS remains a "high priority" among those in his chamber, as well as funds to hospitals. Administrators at University Medical Center in New Orleans and at Lafayette General Medical Center have claimed that inadequate funding could prompt layoffs and closures.

Despite the current wealth of ideas, it remains unclear exactly where the recognized $346 million will appear in next year's budget. The House Appropriations Committee is set to outline its revised plan Monday, before the full House considers spending matters next Thursday.

How state lawmakers will offset the $648 million in expiring funds also remains unknown. Barras said the slimmer projection may lead House members to pass a budget with cuts alone, without raising replacement revenue in a special session.

"There are some members that do feel strongly that maybe a [special] session wouldn't be necessary and that they could live with the cuts," he said.

Edwards has urged state lawmakers to hold a special session to pass revenue bills. A similar session to close the shortfall through taxes failed last month, after House lawmakers rejected replacement measures. All revenue bills must start in the lower chamber.

Barras himself would not commit to another special session, nor would he guarantee that a cuts-only budget would pass the legislative ranks.

"Both things are possibilities," he said.

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