State’s income estimates for next year down $30M (5/22)

Posted May 21, 2009 at 11:44 pm
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BATON ROUGE (AP) — Louisiana’s income estimates for next year’s budget grew a bit grimmer Thursday after the state’s revenue forecasting panel dropped the projections another $30 million.

The revision, by the Revenue Estimating Conference, for the new fiscal year starting July 1 was a slight adjustment compared to the $1.3 billion decrease in the state general fund that already had been forecast for next year.

But the change means lawmakers will have to cut even more from next year’s $27.9 billion budget proposal, unless they can agree on some other source of money to plug the hole.

Economists said the $30 million reduction was prompted by worse-than-expected business and sales tax collections.

“I think Louisiana consumers are retrenching like everybody else,” said Greg Albrecht, the chief economist for the Legislative Fiscal Office, whose revenue projections were selected by the conference.

Louisiana’s overall income drop is tied to several factors: the recession, a plummet in the prices of oil and gas from which the state derives tax and royalty income, and an array of tax breaks approved by lawmakers in recent years.

Legislators are weighing whether to use one-time funds or delay scheduled tax breaks to free up money to offset steep budget cuts planned for public colleges and health services next year. Both ideas face opposition from Gov. Bobby Jindal, who says the state needs to shrink the size of government to cope with years of projected revenue shortfalls.

The Senate will debate a proposal to temporarily delay a planned tax cut for middleand upper-income taxpayers who itemize charitable donations, home mortgage interest and certain medical costs on their state income tax forms. In an unexpected move Thursday, a Senate committee agreed without objection to forward that legislation to the full Senate for debate.

The proposal, backed by Senate President Joel Chaisson, D-Destrehan, could generate $118 million dedicated to higher education. But it’s future could be rocky. Jindal has said he opposes any attempt to stall scheduled tax breaks, and House Speaker Jim Tucker, R-Terrytown, said he thinks it would be difficult to get House backing for the plan.

As the budget wrangling continued, the Senate Finance Committee on Thursday combed through the details of the health care cuts proposed for next year. Health and Hospitals Secretary Alan Levine said his cuts span the entire agency, which is budgeted for $8 billion in 2009-10.

The state’s Medicaid program for the poor, elderly and disabled — the largest spending area in health care — faces a cut of $382 million, budget slashing that largely would be levied on the hospitals and nursing homes that provide care. The health facilities on the chopping block said the cuts would harm patients in a state already struggling to provide care to a large number of poor and uninsured.

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