La. Gov. Proposes Few Cuts to Fill Deficit
Gov. Bobby Jindal proposed Friday to close a $319 million budget deficit this year by cutting $65 million from state agencies and public colleges and tapping into a mix of one-time dollars and savings to plug the remaining gap.
To combat a new budget shortfall projected for next year, Jindal recommended using anticipated federal stimulus dollars.
Lawmakers next week will begin considering the proposal to this year's deficit, with an eye to working out a final version of those budget plans within two weeks. The $29 billion budget must be rebalanced before the fiscal year ends June 30.
Although agencies and colleges will lose dollars, Jindal said the cuts won't harm campuses or state services because he only targeted the savings generated by a hiring freeze enacted earlier this year and a partial freeze he issued in March on state travel, supplies, contracts and other nonessential spending.
No additional layoffs or furloughs of state employees were expected because of the cuts, Jindal said.
"We know that toward the end of a fiscal year it would not have been responsible to ask our agencies to make dramatic cuts with only a few months, a few weeks left in the budget year to absorb them," Jindal said. "The plan we're announcing today worked to protect critical services by avoiding dramatic reductions in health care and higher education."
State departments will lose $35.5 million, and colleges and universities will share a $29.5 million reduction.
University leaders praised the governor's recommendations, saying they will avoid widespread furloughs and damaging reductions they had feared might be levied upon them. Jindal said he used savings estimates submitted by the schools to determine the size of the higher education cut.
"As a result of Gov. Jindal's resourceful use of savings from the spending freeze and other state funds, our faculty, staff and students, as well as our health care providers, are assured there will be no layoffs or furloughs in the near future," LSU System President John Lombardi said in a statement.
To offset the rest of the deficit, Jindal proposed using various unspent balances in state government funds and departments, savings from lower-than-expected debt payments and dollars from a legal settlement with pharmaceutical maker Eli Lilly and Co.
While proposing a way to take care of this year's deficit, Jindal also looked to a new $245 budget shortfall expected in the upcoming 2010-11 budget.
The Republican governor, who has complained about federal spending levels and the federal stimulus package, proposed using an anticipated extension of part of the stimulus law to plug next year's shortfall. The stimulus extension would generate about $321 million for the state Medicaid program. Congress hasn't given final passage to the legislation, but both the U.S. House and Senate have passed versions of it.
Jindal didn't propose any further cuts to rebalance next year's spending plan.
The latest shortfalls were caused by unexpected drops in individual income, sales and severance taxes. It's the state's second deficit this year. Jindal ordered $248 million in cuts earlier this fiscal year.
The governor doesn't propose using any of the state's "rainy day" fund money to help with this year's deficit or next year's budget problems.
Instead, he's asking lawmakers to change the allowable uses of that fund so it can be tapped in the 2011-12 budget year, when Louisiana faces a steep decline in available revenue tied to the loss of federal stimulus and Medicaid money. Business, government watchdog and tea party groups are opposing the changes to the rainy day fund.