Louisiana budget gap for next year estimated at up to $962M

Local News

BATON ROUGE, La. (AP) — Estimates released Friday show Louisiana’s shortfall for the upcoming budget year could reach as high as $962 million, driven by the loss of one-time federal coronavirus aid used to patch together this year’s budget and avoid deep cuts.

The projections for the 2021-22 budget year that begins July 1 were provided to the joint House and Senate budget committee by Gov. John Bel Edwards’ administration.

The numbers reflect income forecasting changes made this week, the loss of the federal assistance and other expected cost increases for housing state inmates, the Medicaid program and education programs driven by student enrollment.

Louisiana is projected to collect more taxes next year than this year, but not enough to offset all the federal coronavirus aid Edwards and lawmakers used in the financial year that ends June 30.

The size of next year’s shortfall, however, doesn’t necessarily indicate the depth of cuts to programs and services that the Democratic governor and the majority-Republican Legislature will have to make to keep the budget balanced.

The state has $293 million in unspent cash from this year because tax collections came in better than expected, and those dollars could help cover some of next year’s expenses. Plus, Louisiana is receiving new federal aid passed by Congress in December, some of which could help offset budget cuts next year once the state learns what strings exist on the latest assistance.

In addition, President Joe Biden is proposing additional aid to states for Congress to consider.

Louisiana also has a $270 million surplus left over from the 2019-20 budget year, but lawmakers and the governor can’t use that to pay for ongoing state expenses.

Under the Louisiana Constitution, 25% of the surplus must flow to the state’s “rainy day” fund. Another 10% must pay down state retirement debt. That will leave about $95 million that can be spent on certain constitutionally allowed one-time expenses, such as debt payments, coastal restoration work, construction projects or savings.

Edwards’ budget proposal for next year is due to lawmakers by Feb. 26. Lawmakers start the legislative session in April and are not expected to finish crafting a budget until the session’s final days in June.

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Follow Melinda Deslatte on Twitter at http://twitter.com/melindadeslatte.

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