Wednesday, February 28, 2024

Louisiana forecasting panel delays income review until Jan.

by Associated Press

BATON ROUGE, La. (AP) — Louisiana will wait until mid-January to update its income projections to account for the latest effects of the coronavirus outbreak, delaying a traditional pre-holiday forecasting meeting amid continued economic uncertainty caused by the pandemic.

Whatever numbers are set by the Revenue Estimating Conference, a four-member panel that draws up Louisiana’s state government income projections, will form the basis for the 2021-22 budget proposal that Gov. John Bel Edwards must submit to lawmakers by Feb. 26.

Setting those projections has gotten even trickier than usual, with a national economic recession caused by the coronavirus, business restrictions enacted in response to the outbreak, increased jobless rates and an oil and gas industry slowdown.

Commissioner of Administration Jay Dardenne, Edwards’ chief financial adviser, said he’s hopeful Louisiana will avoid a midyear deficit in the current budget that ends June 30. But he’s warning the numbers could be grim for the 2021-22 financial year that begins July 1.

“We’re going to have a forecast that’s going to reflect reality, but it’s also going to require some significant cuts in (next year’s) budget if we don’t get some other source of revenue,” such as federal virus aid from Congress, Dardenne said.

Dardenne, current chairman of the Revenue Estimating Conference, asked for the delay in reviewing the income projections, despite a state law that requires a conference meeting before Jan. 1 to revise the official forecast.

He said the panel’s members supported the postponement — wanting to give the state’s economists another month of tax collection data before they have to try to quantify the coronavirus’s effect on finances.

“This is the most difficult year they’ve had to try and figure out what the revenue picture is going to look like with all the uncertainty of where the economy is,” Dardenne said. “Another month helps. Every month gives you a better picture of what things are like based upon the status of the Louisiana economy and what has reopened.”

Besides Dardenne, the conference includes Senate President Page Cortez, House Speaker Clay Schexnayder and Stephen Barnes, an independent economist from the University of Louisiana at Lafayette. To set a new forecast requires a unanimous decision.

Cortez, a Republican from Lafayette, said he and the conference’s other members agreed with Dardenne’s plan to revisit the income projections in January.

In May, the conference slashed the state’s tax and fee income projections for the current budget year by $1 billion, decreasing the state revenue forecast from $12.5 billion to $11.5 billion this year. Cortez said that lower forecast is on track to be “pretty accurate.”

But lawmakers offset most of that drop in revenue — and kept most programs and services from cuts — by plugging gaps with about $800 million in temporary coronavirus aid dollars that Louisiana received from Washington. The budget also used $90 million from the state’s “rainy day” fund to fill shortfalls.

When the federal aid and rainy day money disappears next year, deep budget gaps will reappear if Louisiana’s tax collections do not rebound or if states don’t receive additional federal aid from Washington.

Congress is debating another relief package that includes money for state and local governments, but there are disagreements about whether to keep that assistance in the proposal or what parameters to put on any dollars sent to states and municipalities.

“I feel pretty confident we’re going to get something from Congress,” Cortez said. “But what that something is is a pretty big question.”

The Senate president said he and other lawmakers also worry about continuing to patch together budgets with piecemeal financing, an approach the majority-Republican Legislature and Democratic governor had largely stopped until the pandemic began.

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