DALLAS — Louisiana lawmakers learned Friday that the state could face a gap between spending and revenue next year totaling $895 million.

Most of the shortfall is based on a possible increase in the state’s Medicaid contribution of an additional $538 million in fiscal 2013.

The continuation budget report presented to the Joint Legislative Committee on the Budget by the Department of Administration is based on requests by state agencies. It also includes projected increases in general fund spending due to inflation and population growth.

Gov. Bobby Jindal is scheduled to present a balanced executive budget to the Legislature Feb. 9. Fiscal 2013 will begin July 1.

Sen. Jack Donahue, R-Covington, who chairs the Joint Committee and Senate Finance Committee, said “a lot” of the potential spending in the continuation budget report will not be part of the fiscal 2013 spending plan.

Ternisa Hutchinson, deputy director of planning and budget, said the report includes expenditure increases of $12.3 million due to inflation.

Growth in student enrollment will raise mandated state aid to schools by $104 million in fiscal 2013, Hutchinson said, based on the current funding formula and a projected 2.57% increase for inflation.

The $538 million of increased Medicaid spending includes $330 million of federal aid in fiscal 2012 that is not guaranteed for fiscal 2013. Increased enrollment and higher use will add another $189 million in Medicaid spending, Hutchinson said.

The multi-year report projected shortfalls in the continuation budget of $698 million in fiscal 2014, $694 million in fiscal 2015 and $666 million in fiscal 2016.

The spending outlook also includes $22 million of salary merit increases for state workers. The Legislature has rejected merit pay raises in recent budgets.

Jan Moller, director of the nonprofit Louisiana Budget Project, said the state’s fiscal outlook shows the need for a more sustainable tax base.

“This is the fourth consecutive year Louisiana has faced a massive budget shortfall, and the red ink is projected to continue as far as the eye can see,” Moller said in a prepared statement.

Assistant budget director Barry Dusse told the joint budget committee that December’s projected revenue shortfall in fiscal 2012 of $251 million will be eliminated by the end of the month.

Dusse said the gap between spending and expenditures was filled by moving $38 million of unspent fund balances into the general fund, and $213 million in reduced general fund spending.

Fiscal 2013 general fund revenue is estimated at $8.4 billion. The outlook adopted by the Revenue Estimating Conference last month was down from the official estimate of $8.6 billion endorsed by the panel in April 2011.

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