Gov. John Bel Edwards said Friday he intends to call a special legislative session to rebalance the state budget after Louisiana’s midyear deficit was projected to reach $313 million.
The state income forecasting panel, known as the Revenue Estimating Conference, downgraded Louisiana tax collection estimates to account for unemployment that is dragging income, business and sales taxes below expectations.
The Democratic governor said the action “clearly indicates the need for a special session,” expected sometime next month, to make cuts and consider using Louisiana’s “rainy day” fund to close the gap in the $27 billion state operating budget.
The session is expected to fall in mid-February, between Valentine’s Day and Mardi Gras.
If lawmakers agree to use the rainy day fund, that could provide $119 million to offset a portion of the gap, but a $194 million gap would remain.
“The entirety of the state’s budget must be opened up in order to make these cuts, otherwise they will be concentrated in a few areas and the impact would be too painful for our people to bear,” Edwards said in a statement.
The four-member Revenue Estimating Conference dropped the state’s official income forecast by $340 million for the current budget year that ends June 30. With other financial adjustments, the deficit is expected to be about $313 million.
It’s the state’s 15th midyear budget gap in nine years. Last month, Edwards and lawmakers closed a more than $300 million deficit from the last financial year with savings from hiring and spending freezes, postponed Medicaid payments and cuts to colleges.
Economists said the latest shortfall stems from a downturn in Louisiana’s economy and an unemployment rate that is third in the nation. Even an uptick in oil prices, which means more severance tax revenue for the state, isn’t enough to offset the worsening forecast for personal income, business and sales taxes.