DALLAS - Louisiana's current budget problems will be dwarfed by future deficits unless the state takes action now to prepare for lower revenues later, Gov. Bobby Jindal said Monday.

Speaking to the Press Club of Baton Rouge, Jindal said federal stimulus funds should be used to transition from a state government that has expanded to deal with hurricane recovery efforts to a leaner operation that can operate within its revenues.

"We are facing a multi-year budget challenge," the governor said. "The problem this year is not our only problem. In fact, our challenges this year are far outweighed by the challenges facing us next year and the year after."

Jindal's executive budget for fiscal 2010 eliminates a projected deficit of $1.75 billion, which included $1.4 billion in lower state revenue and $371 million in mandatory spending increases, with the help of $943 million in federal stimulus funds.

The proposed budget relies on $666 million of stimulus funds to replace state general fund revenue, and $277 million to make up for scheduled declines in federal funding for education and health care.

"The federal stimulus funds we received did not wipe away our budget challenges," Jindal said. "Rather, they offered us a way to transition down to a more sustainable size of government, so we can shift toward greater efficiencies during the two years we have stimulus funds, instead of being forced to make dramatic, immediate cuts to balance our budget with such a serious loss of revenue."

Without reductions in state government spending, he said, Louisiana's deficit will be significant in fiscal 2011 and severe in fiscal 2012, when the current federal stimulus program is set to expire.

"Meeting our budget challenges, not only this year, but in the years ahead where we are again expecting decreased revenue, is fundamentally about protecting the future of Louisiana," Jindal said. "If we close our eyes to these challenges they will not go away."

Growing the state's economy is the only solution to declining revenues, according to Jindal. He urged state lawmakers not to raise taxes or undo the progress he said his administration has made in economic development when the Legislature convenes April 27 for a two-month session.

"It is critical for us not to lose the perspective in this upcoming session that responding to the budget challenges facing our state this year and in the years ahead is fundamentally about protecting Louisiana's future," he said. "It will be a determining factor for being able to continue moving our state forward and attracting more economic development projects."

Jindal also outlined a series of budgetary reforms that he wants this session from the Legislature.

The performance of all state funds protected from budget cuts by law or the state constitution should be reviewed every year by the Department of Administration, the governor said, with an automatic termination scheduled for the beginning of fiscal 2011 in July 2010. The funds could be reauthorized for four years, but their existence would be reviewed again at the end of that period.

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