Jay Dardenne, Governor-elect John Bel Edwards’ designee for Commissioner of Administration, held a press conference Wednesday, regarding the state budget.
“We are going to speak the truth, frankly and boldly: the situation is more dire than we thought it was. It is not pretty. It is not sugar-coated. It’s just the facts.”
Louisiana’s budget has an immensely deep hole, with the current budget now appearing to be another $750-million in the red.
“To put this in perspective, a $750-million shortfall is approximately the same size as the entire budget for higher education,” Dardenne elaborated.
Dardenne said the Jindal administration’s mid-year adjustments in late November only took care of the budget hole through October. Since then, revenue collections have continued to decline.
“Oil prices have continued to drop,” Dardenne explained, saying the current price is now more than ten dollars per barrel below the adjusted estimate.
“There has been a dramatic slump in corporate income tax – a more than 300% decline in November; and a slowing of the collection of sales taxes.”
Dardenne attributes the decline in corporate tax collections to businesses hurrying to claim credits that will be suspended beginning January first. He said the shortfall is further exacerbated by higher-higher-than-expected enrollments in public schools, increased demand for and cost of TOPS scholarships, and increasing expenses for Medicaid.
That’s not all of the problem. Dardenne said the next budget, starting July first, will have to resolve a $1.9-billion deficit, with almost half of that hole created by the way the Jindal administration has been balancing the budget.
“We would need $880-million in state general funds to replace the one-time and other means of financing schemes that have been used by the current administration,” Dardenne said.
While he acknowledged the news is not welcome, Dardenne said revealing the full magnitude of the problem is the first step in getting consensus on long-term fixes for the state budget woes.
“We commit to you that we are ending the era of gimmicks and trickery. We’re blowing away the smoke and breaking the mirrors regarding the state budget,” Dardenne said, adding the solutions won’t be painless.
“The answers will all require Louisianians to give something.”