BATON ROUGE, La. (AP) — Louisiana’s multiyear spending spree is skidding to a close. Now, a strikingly different reality of shortfalls and budget cuts face a freshman governor and lawmakers whose first year is better described as a spending festival than a show of restraint.
“They’re going to have a really hard time,” said Barry Erwin, head of the Council for a Better Louisiana who has tracked Louisiana politics for years. “I think it will be a rude awakening, especially when you start looking at the choices you have and none of them are good.”
The struggle to balance next year’s budget — with a shortfall estimated to top $1 billion — could test the popularity of Gov. Bobby Jindal, his strength at the state Capitol and his mastery of political backroom haggling.
During the last regular session, Jindal didn’t prove adept at some of the behind-the-scenes dealing, getting into public disagreements with lawmakers about a legislative pay raise he vetoed and legislative pet projects he stripped out of the budget. Those disagreements came in times of plenty and could come back to bite him as he negotiates in leaner times.
The new reality will force Jindal to put into practice his 2007 campaign rhetoric of the need to shrink the budget, but it also could put him in conflict with his own party if Republican lawmakers continue to push for tax breaks even as the state faces a budget shortfall.
Also, the scene is new for dozens of lawmakers who took office in January with Jindal as term limits wiped out many of the old-timers who had dealt with budget shortfalls, deficits and cuts in times past.
For the new guys, they’ll have to make decisions they avoided when crafting this year’s budget: Do you cut the charity hospitals as the rolls of uninsured grow? Do you reject the annual request for a teacher pay raise? Which Medicaid services for the disabled do you cut? Do you shrink spending at the state’s colleges, even as you push for a better educated work force?
“They’re not going to want to do any of that, and I don’t think they’ve had to face even having to think about that kind of thing,” Erwin said.
The current 2008-09 budget developed by Jindal and lawmakers neared $30 billion and boosted state spending by $1 billion. The budget they’ll have to craft for the 2009-10 fiscal year that begins July 1 won’t be quite as rosy.
Fiscal analysts have said it would cost $1.3 billion more than the state has to spend next year to continue running all programs and keep up with the costs of inflation.
Oil prices have slipped, corporate taxes and personal income taxes have fallen, and the state sales tax remains flat.
With those economic realities and a $360 million income tax break for middle- and upper-income tax filers set to kick in, the state’s income streams are forecast to fall below what came in this year. Plus, the costs of doing business continues to rise with inflation.
Jindal will submit his recommended budget to lawmakers before they return for a regular legislative session in April, and lawmakers will craft a final version.
The governor has said he won’t consider a tax increase to balance the budget. Lawmakers and the administration could tap into the state’s rainy day fund, but that’s a one-time fix that won’t fill the entire hole.
The governor’s financial analysts are considering everything from hiring freezes to wholesale program eliminations as they work on what will be Jindal’s budget proposal.
“We do think it will be deep cuts. We think it will be programmatic cuts,” said Jindal’s top financial adviser, Commissioner of Administration Angele Davis.
Jindal has some assistance to help him negotiate his preferred budget slashing, namely an $865 million surplus left over from last year.
The money can only be used for one-time items, not to fill any budget holes. But Jindal can push to steer it to popular projects that might help him drum up votes for the budget cuts he wants — over those he may not want.
Erwin said Jindal might be able to use the budget cuts to maintain his political strength.
“I think if the governor can make budget cuts that are smart budget cuts and that protect as much of his priorities as he can and that look like they’re cutting out inefficiencies, I think that probably gives him a very strong political position even in the position of making cuts,” Erwin said.
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