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|Solons eye deficit|
A revenue shortfall has state legislators scrambling to cover Louisiana's expenses in light of plummeting oil prices and a decline in sales tax collections.
The Revenue Estimating Committee earlier this week determined state revenues are running some $341 million less in the current fiscal year budget than the REC predicted a few months ago. That means the Legislature, and Gov. Bobby Jindal, too, must come up with $341 million in budget cuts to balance the state's operating budget, which is mandated by law.
State Sen. Francis Thompson said lawmakers need to look to the state's history for lessons on seeing Louisiana through tighter times.
"We've been lulled to sleep before by depending on oil, but we have not done that this time," said Thompson, D-Delhi. "We're probably going to come out okay this year because oil was as high as $140 a barrel."
A significant portion of the state's $31 billion budget comes from oil and gas taxes.
The state's 2009 budget was balanced as long as oil remained above $70 a barrel.
As of Wednesday, oil was trading below $50 a barrel. That will mean significantly less money for state projects, many of which are critical, Thompson said.
"All of these projects are worthy, but in hard times, you have to cut back on some of them and sacrifice a little," said Thompson, who was serving in the Legislature during the last major collapse in oil prices during the 1980s.
Two areas expected to bear the brunt of the deficit: higher education and health care.
State Rep. Frank Hoffmann said the state's constitution protects virtually all aspects of the budget from cuts, leaving lawmakers little choice but to trim services in the state's hospitals and colleges.
"Both of those (higher education and health care) can ill afford to take the hit," said Hoffmann, R-West Monroe. "Unfortunately, that's the only place that can take a hit, constitutionally."
Last week, Gov. Bobby Jindal called on lawmakers to help ensure the state "lives within its means" and does not overspend available funds.
"That means we will have to reduce government spending to a level we can afford," Jindal said. "Raising taxes is not an option and would be the worst thing we could do in an economic downturn."
"So we will make government work more efficiently and we will do our jobs while spending less money," Jindal said.
That was a message that carried well with Thompson.
He said that, besides an across-the-board examination of the state's fiscal priorities, lawmakers should also look at doing more with less.
Thompson believes even small-ticket items such as legislator travel expenses should be examined.
"If every legislator takes one less trip, that adds up," Thompson said.
Hoffmann said lawmakers need to keep a watchful eye on spending to avoid increased costs.
Hoffmann also said the Legislature has taken moves to put the state in a more competitive position for businesses.
"We abolished Stelly last year, which was a great thing to do for the taxpayers because we had lots of money," Hoffmann said. "Now we don't have lots of money but that bill is going to stand. Stelly's still abolished."
During the regular legislative session earlier this year, lawmakers voted to roll back state income hikes the Stelly Plan ushered into law several years ago.
However, taxpayers will not see a decrease in state income taxes until July 2009 at the earliest. That's the case because legislation that authorized the roll back in state income tax rates was amended by House Speaker Jim Tucker. Tucker's amendment, which was backed by the Jindal administration, delayed any income tax cut for tax filers until no earlier than July 1, 2009.
Meanwhile, Hoffmann said sorting out the budget difficulties will take a little time.
"This all happened so fast," Hoffman said.
Legislators will get their first crack at plugging the budget deficit later this week, when both the House and Senate budget committees meet in Baton Rouge.
Thompson said things could have been much worse.
"Comparatively speaking, compared to other states in this region and around the country, we're in pretty good shape," Thompson said.
He noted Louisiana is still sitting on $800 million in one-time funds that could be accessed. Also, there are hundred millions of dollars in funds throughout the budget that are allocated but have not been spent. Thompson said some of that money could be reallocated to more critical projects.
Overall however, the state appeared to be well-prepared for the looming deficit, according to Thompson.
"That speaks well for Louisiana's budgeting skills," Thompson said. "We just need to be lean and tough enough to cut some things that are not essential to the operation of the state."