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Falling Off the Fiscal Cliff

 $1,600,000,000.

“We need to appreciate what we’re saying when we say those words,” LSU economist Jim Richardson admonishes, as Louisiana is standing on the edge of a fiscal cliff.

“We simply do not have enough,” Richardson states.

The reasons behind the shortfall are extensive, but — unlike the last time the state faced such a massive deficit, in 2011 — the options for patch-working a solvency parachute have all been used up. Charity hospitals have been privatized. State property — from vehicles to buildings to land — has been sold off. Dedicated funds have been raided. Even Louisiana’s Budget Stabilization Fund — commonly called the “Rainy Day Fund” is down to a paltry $25-million.

“We have been in budget chaos, without any discipline. There’s no effort to match recurring dollars to recurring expenditures,” says Democratic Rep. John Bel Edwards. “And we’re beg, borrowing and raiding and everything we can to act like everything is okay.”

The state’s revenue forecast is bleak, but only partly because of the drop in oil prices. Just last week, Senate President John Alario quizzed Legislative Fiscal Analyst Greg Albrecht about the projections for other tax revenue.

“You don’t show any increase in individual income tax?” Alario asked.

“Not at this point,” Albrecht said, regretfully. “We have a forecast for about 4.3 percent growth from prior year actual. We’re not even making that growth.”

Republican Rep. Joel Robideaux says the obvious budget-balancing tactics are to raise taxes or eliminate some tax credits and incentives. But Gov. Jindal has said those are options he will not allow.

“Right now, the Speaker has said everything is on the table,” Robideaux says, regarding the legislative conundrum on balancing the budget. “There’s a lot of discussions trying to figure out a direction, and at the same time contemplate the hurdle of the governor’s mandate that he will veto.”

Robideaux admits no definite legislative direction can be set until Governor Jindal unveils his budget proposal the end of this month.

“At that point is when you’ll see all the discussions on what can be done start to turn into solutions,” Robideaux says.

Tomorrow: a look at why oil can’t cushion this particular fall off the fiscal cliff.