Louisiana’s budget shortfall has grown, which could mean deeper cuts to higher education and health care services than initially thought.
Colleges and universities in the state had expected $300 million in reductions for the next fiscal year. However, Governor Bobby Jindal’s administration is now saying that total may be $50 to $100 million more than early estimates.
Jindal’s Workforce and Innovation for a Stronger Economy Fund (WISE) is just one of the programs being considered to be cut. Tax money, construction funds and other revenue was added to the fund that directly links higher education money to the prospective workforce demand.
“We view the WISE Fund as one of the most forward-thinking public policy efforts that this state has seen in a long time,” said Monty Sullivan, president of the Louisiana Community and Technical College System.
Earlier this week, the state downgraded its revenue forecast due to the recent drop in oil prices. In order to make the current budget work for the state, $103 million in cuts will need to be made over the next five months. In the meantime, the financial shortfall for next year has increased to $1.6 billion.
The state has already made $180 million in reductions over the last two months, also as a result of the oil prices.
“I do not know how we are going to fix a hole of this magnitude without devastating people,” said Rep. John Schroder, R-Covington, a member of the Louisiana House Appropriations Committee, in an interview.
Although sales tax collections were higher than expected, it was not enough make up for the heavy decrease in oil prices, according to reports from economists for the state.
While the Jindal administration has promised to try to keep the shortfalls away from the state’s colleges and universities, many are already struggling so much from the proposed cuts for next year that they are having a difficult time staying open.
In order to balance the budget for this year, Commissioner of Administration Kristy Nichols suggested moving some of the cuts planned for next year to this year in order to take advantage of some of the savings earlier. “It’ll be large part of how we’re going to solve the mid-year,” Nichols said.
Nichols has already taken the initiative to ask agencies which cuts they could make now, instead of in the next fiscal year, reports Mark Ballard for The Advocate.
“Our first priority is to take vacant positions and you will see that. And to reduce administrative costs. And to not impact services and not make layoffs,” Nichols said.
Despite a desire to blame the current financial situation of the state on plummeting oil prices, there was already a financial shortfall of over one billion dollars prior to the weakening of energy prices, writes Julia O’Donoghue for NOLA.
“We knew we were facing a large number. We chose not to do anything about that last year,” said state Rep. Brett Geymann, R-Lake Charles, a leader of the so-called fiscal hawks in the Legislature.
Those who are critics of the governor say he has spent too much time relying on temporary finances, such as money from lawsuit settlements, and using that money to pay for permanent and ongoing costs.