BATON ROUGE, La. (AP) – Louisiana officials Tuesday set a conservative estimate for next year’s income forecast that anticipates the state’s economy will remain sluggish amid a halting recovery from the coronavirus pandemic.
State tax collections have come in stronger than expected so far during the virus outbreak. But uncertainty surrounding the pace of COVID-19 vaccinations and restrictions remained strong enough that the Revenue Estimating Conference, a four-member panel that sets the projections used to build Louisiana’s budget, cut its forecast for the budget year that begins July 1.
Under the latest revisions, Louisiana still is projected to collect more taxes next year than this year, but not enough to offset all the federal coronavirus aid Gov. John Bel Edwards and lawmakers used to piece together this year’s budget.
Still, the depth of the budget gaps – and the likelihood of cuts to programs and services – for the upcoming 2020-21 financial year is not clear.
The Revenue Estimating Conference includes four members: Commissioner of Administration Jay Dardenne, Senate President Page Cortez, House Speaker Clay Schexnayder and independent economist Stephen Barnes of the University of Louisiana at Lafayette.
The two state economists that advise the income forecasting conference split on their recommendations. Cortez and Schexnayder, both Republicans, balked at taking the rosier projections sought by Barnes and Dardenne, the governor’s chief budget adviser. Needing a unanimous vote, the conference agreed to the less optimistic forecast.
“I just think we could step more cautiously into it,” said Cortez, of Lafayette. “We all know we’re going to go back” and review the estimates before the Legislature completes next year’s budget.
Under the forecasts adopted Tuesday, the Revenue Estimating Conference projects Louisiana will bring in nearly $9.5 billion in general state tax dollars for the year that ends June 30. That’s $292 million more than lawmakers spent in this year’s budget. The conference set a projection of nearly $9.6 billion for the financial year that starts July 1.
Dardenne said with those estimates, the state income forecast is “multiple hundreds of millions” short of what is needed to continue state government operations at their current level next year when accounting for the loss of $800 million in one-time, temporary federal virus aid.
However, the $292 million in higher-than-expected tax collections this year could be used to help cover some of next year’s expenses. In addition, Louisiana is receiving new federal aid passed by Congress in December, some of which could help offset state budget cuts next year. Louisiana and other states still are awaiting federal guidance on what strings exist on the latest assistance.
“We are hopeful, and we’re expecting that some of those dollars that have been specifically allocated to educational institutions, health care are going to give us some relief throughout the process. But it certainly won’t be dollar for dollar,” Dardenne said.
He said federal money and this year’s unspent dollars are “going to help minimize what otherwise would be devastating levels of cuts.”
Plus, Congress is expected to consider additional aid for state and local governments after President-elect Joe Biden takes office.
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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