Budget Crisis Could Affect State Hospitals, Public Education
Louisiana State Senator Troy Carter, Chairperson of the Senate Democratic Caucus, recently sent a letter to Governor John Bell Edwards urging him to call a special session of the legislature to address the state’s budget crisis. Carter also pledged the Democratic Caucus’ support for the passage of a standstill budget for the 2018-2019 fiscal year.
Previous legislatures filled the budget hole with temporary taxes, but those are set to expire this year leaving a $900 million gap in the budget. Last year Governor Edwards proposed a business tax but republicans in the House killed the bill in the Ways and Means Committee.
If the legislature does not address the state’s fiscal emergency, draconian budget cuts to the tune of one billion dollars are inevitable. Such cuts would devastate state hospitals and public education, both of which are already on life support.
According to the Louisiana Budget Project, “On the surface, cutting $1 billion from a total budget of more than $27 billion may seem tenable. But that’s far from the whole story. Only 29 percent of the budget is made up of State General fund dollars – the rest is federal money, fees and “self-generated” money (such as tuition) and money dedicated to speci c purposes. And nearly two-thirds of the State General Fund is off-limits to cuts (“non-discretionary”) because the state has no choice in whether to spend certain dollars. Examples include debt payments, pension obligations and the Minimum Foundation Program (state payments to public schools).”
The three major national credit rating agencies have downgraded Louisiana over the last two years because of the legislature’s inability to resolve the budget crisis; consequently, the state must pay higher interest rates to borrow money to pay for state services. Extending temporary taxes yet again will worsen the state’s credit rating.
The scal year begins July 1.
