Louisiana Starts Session to Tackle Jindal Budget Plan

DALLAS —The Louisiana Legislature convened Monday for a three-month session that will focus on how to deal with a projected revenue decline of $1.7 billion in fiscal 2011 that could grow larger.

Lawmakers will have the opportunity over the next 90 days to accept, reject, or alter provisions of a balanced, $24.2 billion operating budget for fiscal 2011 proposed last month by Gov. Bobby Jindal.

His executive budget calls for $5.5 billion less in spending than in fiscal 2010. The proposed budget includes about $1 billion in federal stimulus funds.

Jindal’s budget includes a decline in total general fund spending of almost 9%, to about $13 billion from $14 billion in fiscal 2010. Federal funding totals $10.9 billion, down from almost $15.1 billion in fiscal 2010.

The budget proposal calls for a $1 billion decrease in general fund direct spending, from about $9 billion in fiscal 2010. General fund collections have declined by 23% since peaking at $10.2 billion in fiscal 2007.

An editorial in Monday morning’s New Orleans Times-Picayune warned that tough financial decisions would be required to balance the state’s books in fiscal 2011.

“To say that lawmakers will have to make hard choices is an understatement,” the newspaper said. “Yet they must find the vision to look ahead and pass reforms that help stabilize the state’s finances for years to come and end the current cycle of jagged cuts that are eviscerating vital services.”

The Legislative session will end June 21. But before lawmakers can consider the proposed budget for next year, they may have to deal with unexpected drop in state revenue over the past three months that could require further budget adjustments before the end of fiscal 2010 on June 30.

Senate President Joel Chaisson 2d, D-Destrahan, and Senate Finance Committee chairman Mike Michot, R-Lafayette, have proposed using a third of the state’s rainy-day fund, or some $172 million, to cover part of the decline in tax collections.

A number of legislators are opposed to using the fund to help balance the fiscal 2010 budget. Tapping it would require two-thirds approval in both chambers.

The Republican Jindal’s budget-balancing proposals include lowering payments on $10 billion of tax-supported debt by defeasing some outstanding state debt with $76 million from the remaining general fund surplus and $233.7 million collected during a tax-amnesty program in 2009.

A competitive sale of up to $600 million of general obligation refunding bonds, set for April 28, is also expected to lower debt service expenditures. A refunding issue of some $500 million is expected to reduce debt payments in fiscal 2010 by $600,000 and by $3.3 million a year through 2022.

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