Governor's Budget Chief: Deficit From Last Year 'Inevitable'

BATON ROUGE (AP) — Gov. John Bel Edwards' top financial adviser said Monday it is "inevitable" Louisiana will have a deficit to close from the last budget year, though it's too soon to say how large the gap will be.

         Commissioner of Administration Jay Dardenne said the state has one more week of tax collection data to receive before the books are formally closed on the 2015-16 budget year that ended June 30.

         "We're anxiously awaiting numbers," he told the Press Club of Baton Rouge. "Looking at the numbers that have come in, talking to our economists, talking to our fiscal staff, listening to legislative staffers, I think we're going to be facing some amount of a deficit."

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         LSU economist Jim Richardson, who sits on Louisiana's revenue forecasting panel, has said the shortfall could be up to $200 million, driven largely by lower-than-expected business tax collections.

         Dardenne wouldn't put a dollar figure on the expected deficit. But state agencies were asked to lessen spending when the new fiscal year began July 1 as a safeguard against likely cuts.

         "We're hopeful that people are listening and not spending money too quickly," he said.

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         The deficit would have to be closed before the current budget year ends in June 2017.

         Louisiana has struggled through repeated budget shortfalls in the last nine years amid the national recession, the oil price slump and the continued use by former Gov. Bobby Jindal and lawmakers of short-term fixes to close holes.

         Lawmakers, at Edwards' urging, recently raised an estimated $1.5 billion in taxes to shrink cuts in this year's spending plan. Republican leaders are hoping the tax hikes will bring in more money than expected and could help offset last year's deficit.

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         To slow the growth in health care spending, the Edwards administration has been working to renegotiate Jindal-era deals that privatized the services provided by the LSU charity hospitals and turned over the patient care to private hospital managers.

         "They are not confected in a way that is favorable to the state in any manner or form, I don't think. And so, we're having candid discussions with the partners as to what concerns we have about them," Dardenne said

         The negotiations are nearing an end, with Dardenne expecting the administration to announce changes to the arrangements within two weeks. He offered few details, but said the priority will be on preserving medical education programs and continuing the partnerships. He said Edwards' push for an emergency room in north Baton Rouge could be part of the changes.

         Worries also persist about state cash flow problems, with the Edwards administration and legislative leaders weighing whether to take out a short-term bank loan to keep agencies able to pay bills on time. Dardenne said a decision should be made by September.

         The state usually borrows from its own savings accounts until tax collections, fees and other payments roll into the treasury. But Jindal and lawmakers raided many of those accounts to patch together prior budgets, and Dardenne said that left the state with $3 billion less in treasury reserves for short-term borrowing.

         "That has resulted in a severe cash crunch for the state," he said.

         – by AP Reporter Melinda Deslatte



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