The budget architect for incoming Gov Elect John Bel Edwards said Wednesday the state’s budget problems are much worse than previously thought and will require a wide variety of ideas to solve – including higher taxes.
Lt. Gov. Jay Dardenne, in his first press conference as commissioner of administration designee, acknowledged “we’re going to look” at tax increases. But he wasn’t specific and underlined that all options are on the table.
“It’ll be very difficult to do without having some sources of new revenue,” Dardenne said when asked directly how the Edwards administration is going to balance the budget without tax increases.
“The harsh reality is there is no immediate fix that we can point to and say, ‘If we do this we will say this will be the way out of this mess,’” he said.
But the message of the day was that state government is about $1.9 billion short of revenues.
“We knew the budget was a mess, but it wasn’t quite as dramatic as we’re now finding out,” Dardenne said.
The Revenue Estimating Conference ruled Nov. 16 that state coffers came up about $487 million short for paying its bills from the fiscal year that ended June 30 and for the current one, which began July 1. The Jindal administration proposed – and legislators adopted – mid-year fixes.
But Dardenne said much of those corrections have not materialized and when coupled with a continuing drop of oil prices, decline in sales tax collections, and a dramatic slump in corporate income taxes translates to a new $400 million to $450 million shortfall for the fiscal year that ends June 30.
In addition to being short on revenue, the state also needs about $300 million to make payments it doesn’t have.
“The economists tell us our budget is set up to spend money we won’t have,” Dardenne said.
About $190 million of that amount comes from the Jindal administration underestimating how people would use Medicaid, he said.
The state is scheduled to pay public schools $20 million and $20 million for the Taylor Opportunity Program for Students, the popular program that pays college tuition and is called TOPS.
For the next fiscal year, the state is about $1.3 billion short of the money necessary to cover the existing state services with inflation, Dardenne said. That amounts to about 15 percent of the state general fund available to spend.
“We are going to speak the truth, frankly and boldly,” Dardenne said. “We are ending the era of gimmicks and trickery. We’re blowing away the smoke and breaking the mirrors regarding the state budget.”
Dardenne blamed the Jindal administration and its reliance on using “one-time money” – funds from a source that won’t reliably produce revenue – and other accounting methods to balance the budget.
Gov. Bobby Jindal defended his budgeting practices in a prepared statement.
“The state budget is balanced, like it has been every year for eight years in a row,” Jindal wrote in an emailed response to a reporter’s question. “We made a choice not to raise taxes for eight years and instead to cut the size of government in order to balance the budget. Raising taxes hurts job creators and small businesses. Raising taxes would be an easy way for government to be flush with money again, but we have always believed and continue to believe that raising taxes is the wrong approach for our economy.”