DALLAS — Louisiana’s chief budget officer huddled Tuesday and Wednesday with state agency heads, elected officials, and higher education executives on potential spending cuts after determining the state ended fiscal 2010 more than $100 million in the red.

Commissioner of Administration Paul Rainwater said after the meetings that he will announce a plan by the end of the month to deal with the $108 million shortfall in last year’s $30 billion budget.

Rainwater, who is the chief budget adviser to Gov. Bobby Jindal, said the effort would focus on cutting spending in fiscal 2011.

“We’re going to protect critical services,” he said, without offering specific options. “There’s a lot of different ways to get to that number, obviously.” 

Jindal cut fiscal 2010 spending three times when revenue estimates were revised downward after the budget was developed, but those actions apparently were not ­sufficient.

A fourth round of cuts to balance the budget in a single fiscal year would be unprecedented.

Rainwater said figures for fiscal 2010 are not complete, but the state apparently ended the year with a deficit.

He attributed the shortfall to an unexpected drop in corporate income-tax ­revenues.

Louisiana’s constitution requires the annual budget to be balanced at the end of the fiscal year. Any shortfalls must be made up by the end of fiscal 2011, which ends June 30.

The last deficit was in fiscal 2002, when expenditures outstripped revenue by $33.9 million

State officials will officially notify the Joint Legislative Committee on the Budget of the shortfall at its Oct. 22 meeting.

With the official notification, Jindal must present a budget-balancing plan to lawmakers within 30 days.

The governor can reduce state agency budgets by 3% without approval from the Legislature, which would account for the current shortfall, but deeper cuts require legislative action.

Louisiana’s fiscal 2011 budget totals $25.5 billion, down almost 15% from total fiscal 2010 spending of $29.7 billion. The fiscal 2011 general fund budget of $7.7 billion is $1.3 billion less than last year.

Rainwater said the budget discussions — which included Agriculture Commissioner Mike Strain, acting Lieut. Gov. Scott Angelle and Secretary of State Jay Dardenne — also included how to deal with a potential $50 million shortfall in the state’s Medicaid program in fiscal 2011.

Another potential problem is a lawsuit filed in Baton Rouge state district court contending that the Legislature’s use of $198 million from the budget stabilization fund to balance the fiscal 2010 spending plan violated the constitution.

If the state loses the suit, it would have to reimburse the fund by the end of fiscal 2011.

“We will reach out to agencies to ask them to prepare plans for absorbing an additional $198 million reduction, in the event that the court takes issue with this budget language,” Rainwater said after the suit was filed Monday. “We are not raising taxes, so if the court rules against this language, we will have a plan in place to make the necessary reductions.”

Officials are preparing for an drop in revenue in fiscal 2012 estimated at between $1.6 billion and $2 billion.

Last month, Rainwater asked state agencies, including higher education institutions, to prepare for a possible 35% budget reduction in fiscal 2012. He said he did not expect such drastic cuts would be necessary, but wanted to challenge officials to find further cuts.

In an e-mail to faculty and staff, Louisiana State University chancellor Michael Martin said a 35% cut in the system’s budget “would be ruinous to LSU for ­generations.”

Louisiana’s general obligation debt is rated AA-minus by Standard & Poor’s, AA by Fitch Ratings, and Aa2 by Moody’s Investors Service.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.