BATON ROUGE, La. (WGNO) – Governor John Bel Edwards laid out alarming reasons why immediate action needs to be taken to alleviate Louisiana’s budget shortfall Thursday, in a rare and frank speech streamed to the public. In the address, the governor described what would happen if no new revenue was raised, saying “higher education will face catastrophic cuts over the next 4 months,” including massive cuts to LSU’s main campus as well as the Health Sciences Center in Shreveport and Louisiana State University at Eunice.
Governor Edwards warned that if the legislature doesn’t act before April 1, 2016, they will be forced to proceed with cuts to “the LSU Ag Center and parish extension offices in every parish, and Pennington Biomedical Research Center.”
The Southern University System, the University of Louisiana System, and the Louisiana Community and Technical College System has until April 30, 2016.
“Without legislators approving new revenue this special session, some campuses will be forced to declare financial bankruptcy, which would include massive layoffs and the cancelation of classes.
If you are a student attending one of these universities, it means that you will receive a grade of incomplete, many students will not be able to graduate and student athletes across the state at those schools will be ineligible to play next semester. That means you can say farewell to college football next fall,” Governor Edwards said.
So how do we prevent this from happening?
Governor Edwards suggested making significant cuts, including a hiring freeze across state government and reducing tax credits. But Edwards said to stabilize the budget both spending and revenue needs to be right. “Focusing on one without the other would be irresponsible,” he said.
Governor Edwards proposed raising the state’s sales tax by 1-cent and increasing taxes on alcohol and cigarettes.
“I am fully aware that I did not campaign on a platform of raising taxes, but the state’s deficit is now more than twice as big as anyone ever anticipated. So clearly, when the facts surrounding the problem change so dramatically, so must the solutions.
Here’s what I need you to do: We cannot solve this problem without support from you for the measures I am proposing to stabilize our budget,” Governor Edwards said.
Edwards said he would make more than $160 million in cuts to state government spending, use $128 million from the rainy day fund and $200 million in non-coastal BP payments to the state to reduce the current year deficit of $940 million.
Next fiscal year starts July 1, 2016. Edwards said there is already a $2 billion deficit there. His proposed revenue-raising measures should stabilize the budget.
“These proposals include further reducing tax credits, suspending corporate tax deductions, and adding one penny of sales tax to our state’s four-cent sales tax. I am proposing this penny as a bridge that will give us time to stabilize and restructure our state’s tax code. When that restructuring is complete, this penny sales tax will be removed,” Edwards said.
How did we get here?
In his speech, Governor Edwards did not shy away from how or rather who got the state into this “historic fiscal crisis” saying, “for seven years in a row, the state has had growing budget deficits. Year after year, the previous administration made temporary fixes using one-time funds to patch recurring expenses, knowing that eventually the well would run dry. And it has.”
“This year’s $940 million budget deficit is made up of two different categories:
First, the Revenue Estimating Conference – the panel of economists and financial experts our legislature relies on – met yesterday and told us that we are $570 million short of the revenue we originally expected for the year. That’s the first part of the problem. This is due, in part, to the drop in oil prices and a slowdown in sales and corporate tax collections. In fact, we’re paying out more in credits and refunds to corporations this year than we are collecting from them in taxes. This is not sound financial policy.
The other part of our $940 million budget problem this year is $370 million dollars in commitments we made that we don’t have the funds to pay for. This is partly due to irresponsible budgeting by the previous administration. They failed to account for how many people would need access to public health care, how many students would qualify for TOPS, how many people would enroll in our public schools, and how many state inmates would be housed by our sheriffs, among other failures. Now the money is not there to pay those bills.
I know we’ve all heard alarming talk about budgets before, but this is our reality. There are some who will try to downplay the severity of our problems for political gain. Some will claim our state’s economists’ numbers are false. Others will say we simply need to cut our way out of this mess. Remember, for 8 years, we’ve had a conservative Governor with a conservative Legislature, if stabilizing the budget were as easy as cutting spending and simply reducing state contracts, that work would have been done, but it hasn’t.”
Governor Edwards ended his speech by urging Louisianans to call their representatives and senators.
“Tell your legislators we need a responsible fix for this budget – a balance of necessary cuts and responsible revenue that will make our budget realistic and strong. When you hear others talk about solutions, demand specifics,” he said. “Together, we will solve this historic problem.”