Still Don't Understand the Shortfall? We Explain

Feb 22, 2017

“I don’t understand. In my world, a deficit is the difference between your revenue and your expenses.”

State budget shortfalls are complicated, even for Senator Sharon Hewitt (R-Slidell), who sits on the Finance Committee.

“Can you articulate for me in layman’s terms?” Hewitt asks.

With some help from Commissioner of Administration Jay Dardenne, we’ll try.

“You start off behind what you did in the previous year,” Dardenne says,

The budget lawmakers passed last June was short $362-million of what was needed to continue all services in place the prior year. It’s as if you planned your household budget, based on last year’s take-home pay, but forgot to allow for increased withholding – taxes, insurance, retirement -- this year.

“Then you have the flood,” Dardenne continues

The state spent money responding to the August floods – approximately $246-million in unplanned spending. It’s like another car ran into yours. You have to get it fixed and rent a car to get around in the meantime in the meantime.

“It’s a cash flow issue, isn’t it? And we’re going to get money that is going to be reimbursed,” Hewitt asks.

“We’re not going to get that money from the federal government in the current fiscal year,” Dardenne says of the FEMA reimbursement for 90% of the flood expenses. “We’re not sure we’re going to get it next year.”

In other words, it’s going to be awhile before your insurance – or the other guy’s insurance -- cuts you a check for the wreck.

“Then you have to spend $312-million of the current year budget to take care of last year’s deficit.”

You were hospitalized last year. Now that your medical insurance has paid what it will, you still have to take care of the balance. You economize by cutting out those premium cable channels, eating out less often, paying the minimum on your credit card.

“Yeah, I understand that,” Hewitt acknowledges. “But I think that you have a lot more opportunities to find efficiencies and to find savings.”

Yet with all those unplanned expenses, the smaller paycheck you’re getting means you’re falling further behind each month. Then you do your tax return, hoping for a refund. Instead you find you owe the government.

That’s the current shortfall.

So when do you use your savings? And how much do you use? How do you cope with the next financial crisis? That’s what this session’s battles have been about.