State budget shortfall is lower; Gov. Edwards wants to use extra funds for higher ed &TOPS

NEW ORLEANS, LA (WVUE) - Louisiana's budget shortfall is officially recognized as not as large as first feared. And Gov. John Bel Edwards announced Thursday afternoon that he proposes to use the additional revenues coming to the state to eliminate a proposed cut to higher education and reduce cuts in other areas of state government including TOPS, Go Grants, health care and law enforcement.

"This is welcome news that we have been expecting for some time, and these additional resources will certainly help to soften the cuts from the fiscal cliff in a number of important areas," Edwards said.

A key panel tasked with giving official estimates of revenues for state government said Thursday that the shortfall for the incoming fiscal year is now less than $700 million.

The new fiscal year for state government begins July 1.

"At least that's some extra money. It's not enough. But I'm happy to see we're going in the right direction," said Senate President John Alario, R-Westwego.

Alario sits on the Revenue Estimating Conference panel with House Speaker Taylor Barras, a university economist, and Commissioner of Administration Jay Dardenne.

They met to hear the latest from state economists as more than $1 billion in temporary taxes are set to expire June 30, a day before the start of the new fiscal year.

After hearing from the state economists, the REC voted to reduce the shortfall figure to $648 million. Because of recent changes to federal income tax rates, more than $300 million in additional state income tax revenues are expected to flow into the state's bank account.

"So we can have a cautious estimate of what the effect might be, and I think this estimate that I'm, that we, are providing is fairly cautious," said Chief State Economist Manfred Dix.

Edwards said weeks ago that even though the shortfall was expected to be lower than initially anticipated, he still wants to hold a special session before the end of June to raise new revenues to close the rest of the funding gap.

Edwards has proposed deep cuts to the popular TOPS program and state-funded health care just in case new revenues are not approved by lawmakers.

"I think there are some members that do feel strongly that maybe a second special session wouldn't be necessary and they can live with the cuts," said Barras.

But Barras concedes that not all lawmakers would find the proposed cuts palatable.

"I do think there's another large portion of our body that their concerns remain for fully funding higher ed and funding as much of TOPS as we can that would want to consider other options," said Barras.

Private companies running state hospitals have warned of hundreds of layoffs - or even closing some hospitals - if state funding is slashed in a big way. That could undermine the increase in state income collections.

"They've already told us if we're not going to provide funding for them, they're going to lay people off, and so those numbers rapidly become negatives…not just zeroes, they become negatives," Dardenne said.

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