BATON ROUGE, La. — The price tag for Louisiana’s looming mid-2018 budget gap was projected Friday to reach $1.5 billion, but lawmakers and Gov. John Bel Edwards’ administration agreed the estimate was skewed too high by inflation assumptions.
The official calculation presented to the joint House and Senate budget committee was the first update on the so-called “fiscal cliff” since the legislative sessions ended in June.
Most of the shortfall projected for the budget year that begins July 1, 2018, is tied to expiration of $1.1 billion in temporary sales taxes enacted by lawmakers last year. Another $440 million of it accounts for rising state expenses next year.
Commissioner of Administration Jay Dardenne, the governor’s chief budget adviser, said the state’s ongoing tax debate should focus on the $1.1 billion in expiring taxes, however, not the larger figure that includes projections of growing state expenses.
“The (debate) has to be driven by a discussion on revenue because that’s what’s falling off,” Dardenne said after the hearing. “We have to look at it as a $1.1 billion cliff.”
Edwards and lawmakers have been unable to agree so far on how to close the gap. Lawmakers left Baton Rouge earlier this summer without doing anything to offset the impact of the expiring taxes, either through cuts or new state revenue. Edwards, a Democrat, pushed a tax plan to fill the shortfall, but House Republicans blocked the proposals.
News that the gap could be larger than previously discussed made some lawmakers bristle Friday, but the larger $1.5 billion shortfall figure includes projections for rising state expenses, as required by state law.
Those expense increases are largely driven by $227 million in new anticipated Medicaid costs, such as a $141 million back-owed debt to health providers from former Gov. Bobby Jindal’s administration that Edwards and lawmakers have continued to delay.
Other increased costs are expected for a new pay scale structure and raises approved for thousands of rank-and-file state employees, prisoner housing and growing enrollment at K-12 public schools. Nearly $100 of the shortfall estimate is tied to expected cost hikes for state agencies’ health care, insurance and retirement expenses and other general inflation increases.
Several Republican lawmakers pushed against including inflationary increases in the calculation of the budget gap — saying they traditionally don’t give agencies additional dollars to pay for such things.
“It would be a lot better to have real numbers, rather than these inflated projected numbers that just scare everybody,” said Sen. Jim Fannin, a Jonesboro Republican.
Barry Dusse, director of the governor’s Office of Planning and Budget, said the estimate includes expense projections mandated to be in the calculation.
“This is not any type of proposal from the administration. It’s based on arithmetic, and the items included are in statute,” Dusse said. “Some of these will not come to fruition. Some of them will. This is just a tool for everybody to look at.”
Sen. Sharon Hewitt, a Slidell Republican, replied: “It’s not a tool or a proposal, but it does contribute to the conversation.”
Lawmakers could change the law that spells out how the calculation is made.
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