Virus impact on Louisiana budget becomes clearer Monday

BATON ROUGE, La. (AP) — The extent of how deeply the coronavirus outbreak has ravaged Louisiana’s government finances starts to come into focus Monday, when the state income forecasting panel tries to put the first official number on the budget problem.

Estimates set by the Revenue Estimating Conference will be used to craft next year’s budget and determine if any cuts are needed before the current year budget ends June 30. Lawmakers expect a decline in state financing anywhere from $500 million to as much as $1.5 billion, forcing cuts across agencies to keep the budget in balance.

Louisiana has two separate problems depressing state tax collections: widespread unemployment and shuttered businesses from the virus outbreak and an international feud worsening a steep decline in oil prices.

In a preview to lawmakers last week, economists warned of a grim financial picture because of the COVID-19 disease caused by the virus, describing a likely slow and painful recovery.

“As severe as (Hurricane) Katrina was, I think that this event is a bigger hit to the state’s economy,” Stephen Barnes, a University of Louisiana at Lafayette economist and member of the Revenue Estimating Conference, told lawmakers.

To set a new estimate will require a unanimous decision from Barnes and the other members of the conference: Senate President Page Cortez, House Speaker Clay Schexnayder and Commissioner of Administration Jay Dardenne, the chief budget adviser to Gov. John Bel Edwards.

The current legislative session must end June 1, and lawmakers are starting to question whether they can complete a budget in time — or if they’ll need to convene a special session in June to finish crafting the spending plans.

Cortez said the task is complicated by the uncertainty surrounding the federal aid available to the state for the virus response and the strings attached. Cortez said he’s unsure that lawmakers will be able to complete their budget work without a special session.

“I’m less optimistic that given the amount of time that we have left, that we’re going to be able to get final passage of a budget” in the regular session, said Cortez, a Lafayette Republican.

Louisiana received a $1.8 billion direct aid grant from Congress. The governor intends to earmark $810 million for local government agencies and the remaining dollars for state agencies.

But federal guidelines have offered limited flexibility for the dollars, making them unavailable to offset tax revenue lost because of the virus. State and local government leaders hope Congress will change the rules to allow the money to be used to fill budget gaps.