Panel cuts Jindal’s forecast by nearly half

Louisiana’s income forecasting panel Monday rejected a push by Gov. Bobby Jindal’s administration to boost revenue forecasts by $118 million next year, instead choosing a more conservative $65 million increase.

Revenue Secretary Tim Barfield told the Revenue Estimating Conference that an outside consulting firm hired by the Jindal administration identified ways for his agency to bolster tax collection efforts and bring in more money for the state treasury.

But some members of the conference, which decides how much money state lawmakers and the governor have to spend each year, refused to consider the enhanced collection efforts in the forecast for the 2014-15 fiscal year.

They said there’s no way to know if those dollars would appear.

“We have numbers here that we really have no historical precedent for,” conference member and LSU economist Jim Richardson said.

Louisiana House Speaker Chuck Kleckley, R-Lake Charles, another REC member, also disagreed with the approach, saying if the dollars didn’t materialize as projected, it could force midyear cuts.

“The last thing I want to do is adopt a forecast that does not happen,” Kleckley said.

The income forecasting panel has four members: Richardson, Kleckley, Senate President John Alario, R-Westwego, and Commissioner of Administration Kristy Nichols, the governor’s chief budget adviser. Any changes to the revenue forecast must get unanimous support from all four members, so disagreement from Richardson and Kleckley stymied the administration effort.

Barfield outlined a list of planned changes to his department, including enhanced auditing, technology upgrades and new data analysis that he said were recommended by the consulting firm Alvarez & Marsal. He said the changes would increase sales, severance and individual income tax collections next year and over many years.

“If you look at these estimates, I feel very confident,” Barfield said.

Richardson said he believed the efforts could generate new cash for the state but he didn’t know when.

“I think jumping to $54 million in year one is a bit premature,” he said.

Barfield replied: “I think putting zero on it is absolutely unreasonable, too.”

Richardson suggested the larger forecast sought by the Jindal administration had the “aura” of trying to boost the income estimate to solve budget problems.

The Legislature’s chief economist, Greg Albrecht, offered a similar assessment, saying the change sought by the Jindal administration could “bias the forecast.”

“I think they made a great case for beefing up their resources. I don’t know that they made a great case for increasing the forecast,” he said.

Barfield said that without the estimating conference agreeing to the revisions suggested by his office and the consulting firm, it would be a disincentive for him to put the enhanced collection efforts in place.

With the enhanced tax collection forecast rejected, the income estimating panel instead gave lawmakers another $65 million to add to next year’s budget to reverse planned cuts and fill gaps in the fiscal year that begins July 1.