New governor not ruling out tax hikes to rescue state budget

New governor not ruling out tax hikes to rescue state budget

BATON ROUGE, LA (WVUE) - Governor-elect John Bel Edwards does not take office until Jan. 11, but his team is already trying to prepare the Louisiana Legislature and the public for the budget crisis that must be solved.

"People need to understand the severity of the problem. This is not playing Chicken Little here," said Lt. Gov. Jay Dardenne, who will become Edwards' Commissioner of Administration on Inauguration Day.

Dardenne sent a letter to state legislators on Dec. 30 warning that the budget mess is monstrous.

Dardenne said the funding shortfall for the current budget year that ends June 30, 2016, has grown to $750 million.

"The size of mid-year deficit is the same amount of money the state spends on higher education in an entire year. This isn't a budget hole, this is a budget crater," said Mike Sherman, FOX 8 political analyst.

The new budget year begins July 1, and the state's bank account is expected to have $1.9 billion less than needed. In recent years, budget problems are nothing new, but certain factors in recent months have made the state's financial picture dire.

"Very sluggish corporate income tax coming, people taking credits early, immediately to avoid anything that may change in the future, reduced sales taxes that were expected and a continuing decline in the price of oil," Dardenne said during a Wednesday news conference on LSU's campus where Edwards transition team is housed.

Dardenne said tax increases are not being ruled out as they work on a plan to solve the crisis.

"Everything's on the table," he said.

Dardenne conceded that balancing the budget will be a challenge without new revenues.

"It's going to be very difficult to do without having sources of new revenue. We're going to continue to cut where we can cut, but obviously the message here today is we have a dramatic shortfall - more so than everyone had been led to believe," he said

Dardenne said the Edwards administration will not use trickery or gimmicks to balance the budget, a swipe at Gov. Bobby Jindal's administration.

He said budgets in recent years have relied on non-stable sources.

"The misuse of funds has to do I would say more with the manner in which the budget has been prepared and presented over the course of the last several years because it's been overly reliant on money that is not recurring to fund recurring expenses," said Dardenne.

"This is the time for John Bel Edwards to set expectations and blame as much as possible on the previous guy," said Sherman.

But politically speaking, the new administration has to know that tax increases will be tough sell.

"He's got a lot of popularity to give. With the budget crisis, he's got to solve right now, he's going to have to give some of that up," Sherman said.

Edwards has not unveiled his proposals. He plans to call a special legislative session for February.

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