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Gov. Edwards discusses budget crisis during unprecedented statewide address

John Bel Edwards (Source: LPB) John Bel Edwards (Source: LPB)
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BATON ROUGE, LA (WAFB) -

In a rare public address Thursday, Gov. John Bel Edwards reinforced his proposals for fixing the budget hole while simultaneously laying out the grim future that Louisiana could face if action is not taken regarding the current shortfall. The speech comes just one day after the projected budget deficit for the current fiscal year increased to nearly $1 billion. 

"We are in an unprecedented position," he said, while calling on the legislature to adopt his budget proposals, which includes increased revenue coupled with cuts and use of rainy day funds. "Once again, we must focus on solutions and not allow party labels and bickering to pull us apart." 

On Wednesday, the Revenue Estimating Conference adopted an estimate that has the deficit growing from $750 million to $870 million. The Governor’s Office is meanwhile using an even more grim estimate: a $943 million shortfall.

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Governor delivers statewide address, State Treasurer gives GOP response 

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A cornerstone of the Edwards plan is increased taxes. As it stands, revenue would account for approximately $435 million of the shortfall. He acknowledges that he had run a campaign against tax hikes.

"The state’s deficit is now more than twice as big as anyone ever anticipated, so clearly when the facts surrounding the problem change so dramatically, so must the solutions," he said.

The other $488 million would come from a combination of cuts to state government spending coupled with raids of other funds. For example, the governor has proposed using $128 million from the Rainy Day fund and $200 million in non-coastal BP payments. The cuts to state government spending would amount to $160 million. 

Even if he gets his wish for increased revenue, he said Thursday night that higher education will need to slash around $42 million in spending.

If a plan is not adopted by the legislature, universities could face even deeper cuts. Edwards said some universities could be forced to shut down while LSU’s main campus would run out of money after April 30.

"It means that you will receive a grade of incomplete. Many students will not be able to graduate and student athletes across the state at those schools will be ineligible to play next semester. That means you can say farewell to college football next fall," Edwards said.

Another area that could see cuts if the budget is not fixed is healthcare. The governor was blunt on this topic as well, explaining that with larger cuts, safety net hospitals could close, starting in places like Lake Charles, Alexandria and Bogalusa.

"Our health care system is on the verge of imploding," he said.

Following the speech, State Treasurer John Kennedy gave the Republican response, criticizing the governor on his tax proposals and calling for more cuts, including to statutory dedicated funds.

"We need to unlock that money and require the programs that money is paying for to compete with higher education and healthcare for appropriation," Kennedy said.

He called for a variety of other cost saving measures, including cutting state consultants and working to fight Medicaid fraud.

"Basically what the governor is saying, he’s telling Louisiana families and Louisiana businesses that they need to cut their budgets so that Louisiana state government doesn’t have to cut its budget," he said.

During his speech, Edwards objected to this criticism, attacking his predecessor in the process. 

"Remember for eight years, we’ve had a conservative governor with a conservative legislature. If stabilizing the budget were as easy as cutting spending and simply reducing state contracts, that work would have been done, but it hasn’t," he said.

The reason for the shortfall is multi-fold. About $570 million of the shortfall is the result of low oil prices coupled with slowing income from sales and corporate taxes.

The other $370 million is the result of what Edwards described as "commitments we made that we don’t have the funds to pay for." Edwards blamed his predecessor, saying "this is partly due to irresponsible budgeting by the previous administration."

He indicated that the Jindal administration had not accounted for increased numbers of people needing access to public health care, qualifying for TOPS, enrolling in public schools, and being jailed by sheriffs.

Political analyst Jim Engster said while Edwards may be accused of using scare tactics, this case may be different.

"I think that governors, quite often, when they're facing a budget situation, they'll call it a crisis and talk about removing patients from dialysis machines in hopes that that'll make up on the electorate and lawmakers," Engster said. "Well this time I don't think it's an exaggeration. There really is a fiscal crisis and lawmakers don't have good choices."

Looking forward to special session, Engster said that with party lines drawn, finding compromise could be a challenge.

"They’re going to have to probably cut programs and raise taxes, so they’re going to end up ticking off people on both sides of the aisle," he said. "We have a governor from one party and a legislature dominated by another party and they have different philosophies and somehow they’ve got to come together and make this work."

On Saturday, a meeting is scheduled to discuss the $2 billion shortfall already slated for the 2016-2017 fiscal year. The special session, meanwhile, is scheduled to start on Sunday.

The following is the governor's special address: 

Copyright WAFB 2016. All rights reserved.

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