State to face $1.2B budget shortfall

Next year’s state spending plan could be off by as much as $1.2 billion, but the projected shortfall was only briefly discussed during a meeting at the State Capitol on Thursday.

Gov. Bobby Jindal’s administration says Louisiana has plenty of time to reap savings and bring in more revenue to fill in the gap.

“We have already started to work on the solutions,” said Barry Dussé, director of the governor’s Office of Planning and Budget, during a Joint Legislative Budget Committee meeting. “We’re well on our way in solving this shortfall.”

Similar budget issues seem to come up yearly, and lawmakers at Thursday’s meeting appeared mostly unfazed by the news. They quickly moved on to the next item, though Chairman Jim Fannin, R-Jonesboro, said he was skeptical of plans to try to fill the hole before the budget is due to go into effect July 1, 2015.

“I know this is all forecast, but I don’t see anything that gives us any indication that there’s a lot of growth in revenue that we can expect over the next three years,” Fannin said. “I don’t have a lot of confidence that we can expect all of that to materialize.”

The state has seen repeated shortfalls in recent years.

This year’s $25.6 billion state spending plan has been criticized by some legislators for the way it was put together: relying on the sale of property, targeting tax scofflaws and leaning on the repayment of Hurricane Katrina loans. The patchwork budget also was propped up with funding that was pulled from leftovers across state government. The nonpartisan Legislative Fiscal Office concluded that it relied on nearly a billion dollars that won’t be available next year.

But the message from Jindal’s top budget advisers on Thursday was, again, not to worry about next year’s budget, which lawmakers will sort out formally during next year’s legislative session that begins in April.

“It’s important to understand that the $1.2 billion is not an actual deficit — the calculations do not consider other key factors that contribute to the budget such as new policy initiatives that save money, efficiencies or other means of financing that are identified,” Commissioner of Administration Kristy Nichols, the governor’s chief budget adviser, said in a statement.

She said plans for closing the $1.2 billion gap include the following:

$215.6 million in savings identified by the state’s private efficiency consultant Alvarez and Marsal

$145.3 million in additional money brought in through the Department of Revenue

$240 million in private donations the state hopes to lure for nursing homes.

She also noted that the budget estimate has about $150 million built in for inflation and other expenses as a safety net that the state likely won’t need.

During the Budget Committee meeting, Fannin said the savings ideas “look good on paper,” but he wondered whether the state could rely on them.

Follow Elizabeth Crisp on Twitter, @elizabethcrisp. For more coverage of the Louisiana Legislature, follow our Politics blog at http://blogs.theadvocate.com/politicsblog .