Wednesday, July 24, 2024

Analysis: Budget cutting discussion to begin this week

by BIZ. Staff

By MELINDA DESLATTE, Associated Press

BATON ROUGE (AP) – The “fiscal cliff” is about to start getting real.

After months of talk about how Louisiana would make $1 billion in state budget cuts if lawmakers don’t replace expiring sales taxes, Gov. John Bel Edwards will unveil this week the first proposal for how those cuts might look.

The Democratic governor doesn’t want to recommend the slashing, but he’s required to give lawmakers a spending plan for next year. And he has to use the money forecast to be available.

It’s unclear if the release of the governor’s budget proposal Friday will create the sense of urgency Edwards wants from lawmakers in his push to pass a tax package. But it definitely will create worry for the people whose services are proposed for the chopping block.

Edwards painted a grim picture of what the cuts will look like in his budget proposal for the financial year that begins July 1.

“It is not going to be pretty. It will not reflect a budget that I want to see implemented. And in fact, the cuts will be devastating,” the governor said.

He’s made similar comments often, in a sort of foreboding warning to the people of Louisiana. Because certain portions of the budget have fewer protections, he said, “You will see the lion’s share of those cuts directed to health care and higher education.”

Louisiana’s colleges, the TOPS free college tuition program, safety-net hospitals and health services for the poor, elderly and disabled all are expected to be proposed for heavy reductions.

State lawmakers have an idea what these cuts will look like. As the state’s careened from one financial crisis to the next over the last decade, similar conversations about where the slashing could fall have been repeated over and over again.

The cuts in Edwards’ spending plan likely will be larger than $1 billion. That’s how much the state’s general fund tax dollars are projected to shrink next year, but removing those dollars from programs also would force the state to lose some federal dollars tied to Louisiana putting up its own money to receive them.

Officials estimate the cuts could balloon to $4 billion, out of a state operating budget of around $28 billion, with the loss of federal matching dollars.

While many Republican lawmakers, particularly in the House, have talked of the need to pare spending and shrink the size of government operations, no one has offered a detailed plan to cut $1 billion or more.

House Appropriations Chairman Cameron Henry has suggested Edwards will use budget-cut scare tactics, proposing reductions that would hit the most popular programs and critical services in his constant “looking for more money” from taxpayers.

However, there are limits on where anyone can propose cuts because only a portion of Louisiana’s budget is discretionary spending.

State government must maneuver through a labyrinth of federal regulations, constitutional restrictions, debt payment requirements, retirement obligations, court judgments and self-inflicted complications that limit how the state can make cuts and often dictate where it must spend.

Edwards is proposing sales and income tax changes to replace the money slated to be lost from a 1 percent state sales and other temporary taxes that expire July1. He’s been unable to persuade enough House Republicans to win support for the ideas.

Negotiations continue, but the two sides appear far apart.

Republicans said the governor expects them to pass tax hikes on the public with too few details about their impact. Edwards counters that the ideas he’s offering aren’t new, have been studied for years and have reams of financial analyses.

Taxes can’t be considered in the regular legislative session that runs from mid-March until early June. Edwards wants to hold a February special session on taxes so lawmakers would have the additional money to plug into the budget they are supposed to craft in the regular session. If they can’t reach a tax deal by next month, lawmakers who have been calling for slashing government spending will get their turn to offer ideas for how it should be done.

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