State budget shortfall for next year pegged at $1.2 billion, mirroring gaps in previous years

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BATON ROUGE, Louisiana — Louisiana state lawmakers got their first glimpse Thursday of next year's budget gap that they'll have to close, and it's another hefty shortfall: $1.2 billion.

The grim news, delivered to the joint legislative budget committee, barely raised eyebrows at the committee hearing, after more than six years of such disappointing financial forecasts.

The shortfall is projected for the 2015-16 fiscal year that begins July 1. Gov. Bobby Jindal and lawmakers will decide in next year's legislative session how to address the hole.

Barry Dusse, director of the governor's Office of Planning and Budget, told the committee that the administration is devising ways to close the gap.

"We already have started working on solutions for next year," he said. "We're well on our way to solving this shortfall."

Dusse said the administration expects the state's revenue forecast to improve, providing millions of new dollars for spending. He also said state agencies will save more than $200 million next year from the recommendations of consultants with Alvarez & Marsal, a New York-based firm that was hired to find ways to cut state costs.

Budget committee Chairman Jim Fannin, R-Jonesboro, was skeptical.

"I don't see anything that gives us any indication that there's a tremendous amount of growth that we can expect over the next three years" in state finances, he told Dusse.

Fannin also said he didn't believe the consultant's ideas would save nearly as much as the Jindal administration claimed.

"I don't have a lot of confidence that we can expect all of that savings to materialize. It looks good on paper," he said.

Jindal and lawmakers used $991 million in patchwork financing to balance this year's $24.6 billion budget that won't be available the following year for spending, according to the nonpartisan Legislative Fiscal Office.

That piecemeal funding includes savings from an advanced debt payment, trust fund dollars, money from a tax amnesty program, loan repayments, pharmaceutical settlement dollars and other one-time sources of cash.

Even as they were approving the final version of this year's budget, lawmakers were worrying about the looming headache they faced next year.

The forecast for next year's shortfall — developed by the Jindal administration as required by law — involves replacing all the patchwork financing, while also accounting for inflationary increases in salaries, retirement and health care. Many of those inflationary costs aren't funded each year, so the actual shortfall could be slightly lower.

After the committee discussion, Jindal's Division of Administration released a list of ways it was working to close the budget gap for next year.

In addition to cost-cutting from the consultant's ideas, the administration said it expects to get another $145 million in tax collections based on Alvarez & Marsal recommendations for boosting collection efforts.

"We present a balanced budget every year to the Legislature, and next year will be no different," Division of Administration spokeswoman Meghan Parrish said in a statement.

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