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Story Archives: Caution needed in forecasting state revenues
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|Caution needed in forecasting state revenues|
House Speaker Jim Tucker and LSU economist Jim Richardson were correct to hold the line last week on recognizing an increase in revenues for state government.
Tucker and Richardson are members of the state Revenue Estimating Conference. The conference is comprised of the governor or his designee, the Speaker of the House of Representatives or his designee and the president of the state Senate or his designee. The REC also is comprised of a faculty member from a state college or university or one of the private institutions who is an expert in revenue forecasting.
The REC meets periodically to forecast revenues for state government.
The REC met Thursday where Commissioner of Administration Paul Rainwater – representing Gov. Bobby Jindal – pressed REC members to declare that some $114 million in additional revenues were available for the current fiscal year. Rainwater also wanted the REC to acknowledge additional revenues for the 2011-2012 fiscal year, which begins July 1.
Currently, the state faces a $1.6 billion revenue shortfall heading into the new fiscal year. Jindal, meanwhile, ordered mid-year budget cuts in the current fiscal year to offset expenses in light of depressed tax collections amid a lackluster economy.
Rainwater's move to have the REC recognize additional revenues for the current fiscal year and for the one that begins July 1 was based upon an upward trend in revenues collected by state government. In other words, the economy's performance apparently has improved of late, prompting more tax revenues to flow into state coffers.
If the REC had gone along with Rainwater's request, the move certainly would have assisted the Jindal administration in piecing together a balanced budget for the Legislature to entertain during the regular session in the spring. Remember, the administration must give state lawmakers a balanced budget to consider in mapping out a spending plan for state government to follow in any fiscal year.
We do not fault Rainwater or the administration in general for requesting that the REC recognize additional revenues. Obviously, the administration would rather have more money at its disposal in preparing a budget for the new fiscal year in lieu of calling for deep cuts in spending in the new fiscal year.
The reality of it all is the economy in Louisiana remains stagnant for the most part, and we do not know with any certainty that tax collections will hold steady or improve over the next year or two. Hopefully, tax collections won't regress.
That said, Tucker and Richardson were wise to play it safe in forecasting state revenues for the not-too-distant future.