BRADENTON, Fla. – Facing a second $300 million deficit this year, Louisiana Gov. John Bel Edwards said lawmakers must meet in a special session and "use a scalpel, not a sledge hammer" to make strategic cuts.
"We're going to cut spending in a way that will have a real impact on the people in Louisiana," Edwards told the Joint Legislative Committee on the Budget Friday.
Edwards said he planned to call the special session for Feb. 13-23, an announcement that will satisfy a 30-day legal requirement to cure a $304 million mid-year deficit.
On Feb. 6, Edwards will release his recommendations for cutting the budget, which will require help from the Legislature because it can take action on areas of the spending plan that the governor cannot.
Edwards said he will not recommend any tax hikes to deal with the shortage.
However, he will ask lawmakers to dip into the "rainy day fund" for $119.6 million, which is one third of the budget stabilization fund's balance and the highest amount that can be withdrawn.
Edwards said he will propose minimal cuts to higher education and healthcare, and no reductions for K-12, the Department of Corrections, and the Department of Children and Family Services.
Some lawmakers opposed using the savings account to blunt the budget cuts and others opposed returning to Baton Rouge before their regular session begins April 10 because of the cost.
"I believe all of us can agree it is imperative we have a special session and deal with this surgically rather than with butchery," said JLCB member Sen. Jean-Paul Morrell, D-New Orleans.
In December, Edwards and the committee dealt with a $312.6 million deficit discovered when the fiscal 2016 books were closed.
The state is dealing with a myriad of problems, including spending mechanisms by the prior administration that included using all the state's one-time sources of revenue on recurring expenses, sweeping fund balances, and pushing payments into future years.
Edwards, who took office a year ago, immediately said that he would not use what some lawmakers called "smoke and mirrors" to budget.
The state's efforts to restore structural balance have also been complicated by a recession fueled mostly by low crude oil prices, the loss of 26,000 jobs in the last year, and lower-than-anticipated state sales and income tax revenues despite a temporary 1-cent increase in the sales tax.
Edwards told the Joint Legislative Committee on the Budget that he will propose legislation during the regular session to repair the state budget and improve revenues based on recommendations of the Task Force on Structural Changes in Budget and Tax Policy.
The 13-member task force issued its final report Friday stating that "a failure to act is not an option."
"Most of the temporary revenue fixes implemented in 2015 and 2016, valued at well more than $1 billion, will expire in 2018," the report said. "Realistic spending cuts of this magnitude are not expected to be found."
The report recommended that the state avoid budgeting practices that allow for spending beyond available recurring revenues.
It also suggested expanding the sales tax base while reducing the rate from its current 5% to 4% and eliminating taxpayer and corporate deductions for federal income taxes on state filings.