BATON ROUGE, La. (AP) — For the sixth year in a row, Louisiana has a midyear budget deficit caused by worse-than-expected tax collections. But for the first time since the financial woes began, Gov. Bobby Jindal's administration won't be making cuts to close the gap.
The state's income forecasting panel, the Revenue Estimating Conference, determined Wednesday that state government will bring in $35 million less than was projected for spending during the 2013-14 budget year that ends June 30.
But rather than levy cuts on state agencies, the Jindal administration will ask lawmakers to use unspent dollars from the state's recent tax amnesty period to fill the gap.
Commissioner of Administration Kristy Nichols said the dollars will be swapped out in the state health department's budget to keep everything balanced, under a proposal to go to the Legislature's joint budget committee next week.
"We'll use the excess collections for amnesty. No midyear cuts," said Nichols, the governor's chief budget adviser.
A recent amnesty period allowed delinquent taxpayers to get caught up on their tax bills without any penalties and with only half the interest charges they would have otherwise owed. The program generated more money than was included in this year's budget, with at least $90 million unallocated and available for lawmakers and the Jindal administration to spend.
That will more than cover the drop in the income forecast, which is largely tied to worse-than-expected corporate and sales tax collections. The reduction, however, is modest in a state general fund of $8.3 billion and an overall budget that tops $25 billion.
With the changes adopted Wednesday, corporate income tax is expected to be nearly 17 percent lower than what was collected last year, while sales tax is projected to be nearly flat.
Corporate tax collections are volatile, and have fluctuated widely in recent years.
Greg Albrecht, the Legislature's chief economist, said he can't explain why sales taxes aren't increasing even as economic drivers, like job growth and corporate profits, are improving. He said other states are showing growth in their sales taxes, and the flatness in Louisiana's was worrisome.
The Revenue Estimating Conference also settled on a forecast for next year that the Jindal administration will use for its 2014-15 budget proposal, to be presented to lawmakers on Jan. 24. That spending plan will pay for programs and services in the fiscal year that begins July 1.
The four-member forecasting panel includes the governor's commissioner of administration, the Senate president, the House speaker and an independent LSU economist.
Economists told the conference that the tax amnesty program will depress future corporate tax collections. They said businesses paid debts in the amnesty period that they otherwise would have haggled over and paid off in later years.