An economist who helps decide Louisiana’s state income forecast has delivered grim news to Gov. John Bel Edwards and legislative leaders, saying the state could end up with as much as a $200 million deficit this year.
If the expectation pans out, it would worsen state financial problems in the upcoming budget year that begins July 1.
Jim Richardson, an LSU economist who serves as the independent member of the state’s Revenue Estimating Conference, said he met Thursday with Edwards, Senate President John Alario and House Speaker Taylor Barras, among others, to talk about how far business tax collections have fallen below the state’s official forecast.
Richardson’s assessment was Louisiana appeared on track to collect up to $200 million less than the $359 million expected from corporate income and franchise taxes in the budget year that ends June 30.
“Unless it’s a real miracle, I don’t think we’re going to make it,” Richardson said Thursday night.
This year’s budget was built on the income forecast. If the tax dollars fall short, the state would end the financial year with a deficit that would have to be closed in the next year.
Oil prices have rebounded a bit above the state forecast, but individual income and sales taxes are sluggish, so improving oil prices won’t bail out the state budget, Richardson said.
“There was no sign that they were going to make up that difference or allow us to offset in some other way,” he said.
The news comes while lawmakers are meeting in a special session called by Edwards to raise taxes to help lessen cuts in next year’s budget, when the governor’s administration estimates the state already is $600 million short of the money needed to continue all current government services.
Richardson said the state’s tax collections for the budget year that ends June 30 won’t be certain until September. His figures are an estimate. But he said he wanted to provide the information to the governor and legislative leaders so they can start planning for the expected problem, which would be rolled into the upcoming budget year that begins July 1.
“We won’t be absolutely sure about this until September, and I hope I’m wrong,” the economist said. “But I didn’t want it to be a surprise.”
Without accounting for any possible deficit from this year, lawmakers haven’t agreed to raise the $600 million Edwards sought for next year’s budget. The House has agreed to tax changes that would generate about $220 million next year, while the Senate backed a tax package that could provide at least $400 million.