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State’s budget fix could be temporary

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Written by
Mike Hasten
 Source: Shreveport Times

BATON ROUGE — The governor’s office and the Legislature have patched the current hole in the budget but more woes may be in store for the near future, a state fiscal officer says.

Greg Albrecht, economist for the Legislative Fiscal Office and one of two economists for the Revenue Estimating Conference, said Monday that the $251 million “budget adjustments” approved Friday by the Joint Legislative Committee on the Budget fixed a hole in the current year’s funding plan but a larger one looms for the next fiscal year.

Although the recent action was called a budget cut, Albrecht says “it doesn’t really mean they’re going to cut $251 million in services. It’s really about half” because the administration plan makes up $121 million of the reduction by finding “alternative means of finance.”

The budget analyst told the Press Club of Baton Rouge that “the Division of Administration was careful not to say it was going to annualize the $251 million reduction in the coming year,” meaning that the new budget would not automatically be reduced to match the current situation.

He said Commissioner of Administration Paul Rainwater did say during the Joint Budget meeting that there might be a $700 million deficit reduction problem in next year’s budget.

The state has two different types of problems — revenue shortfalls and overspending, particularly in the public education budget, he said. About $43 million of the $251 million budget adjustment was to pump more money into public schools because of an enrollment increase.

Albrecht said it seems like the public school system could get a better handle on enrollment, since for the past several years more money has had to be pumped into the funding formula because of an underestimation of the number of students enrolled.

For example, next year’s budget will be based on the number of students enrolled in schools next month. Albrecht said schools have known the past several years that enrollment is climbing but they don’t include an estimate of that in their budget requests.

 

“It’s a pretty big draw on the general fund, and there’s no serious attempt — it doesn’t seem like it at least — to predict the fundamental driver, kid count,” he said.

Another factor that could cause problems, Albrecht said, is a lawsuit challenging the way the state handled repayment — or lack of repayment — of funds taken out of the Budget Stabilization Fund, commonly referred to as the Rainy Day Fund.

The Legislature interpreted the constitutional provision as not having to pay it back until there was a marked improvement in state finances and passed legislation to that effect.

The lawsuit is based on a strict interpretation of the state Constitution that the money has to be paid back immediately.

If the plaintiffs win, that’s another $150 million the state would have to find.

Albrecht says that if the courts — after appeals — find for the plaintiffs, “we would have an $800 million Rainy Day Fund and it doesn’t matter how much it rained, we would never be able to use it.”

A hearing on the lawsuit was scheduled for Jan. 9 but attorneys for the plaintiffs canceled it. Albrecht said “they had something else to do.”

Jan. 9 is inauguration day for state officials and the national championship game between LSU and Alabama will be played that night. Gov. Bobby Jindal has scheduled no night inaugural events

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Written by demon53

December 21, 2011 at 2:37 pm

Posted in Uncategorized

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