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Gov. Edwards’ plan to fill a $304M budget gap faces an uncertain fate

February 15, 2017
By Annie Ourso
Originally Posted on Greater Baton Rouge Business Report

The Louisiana Legislature convened on Feb. 13 for a 10-day special session to address the state’s $304 million midyear budget gap, but it remained unclear leading up to the session whether legislators—particularly Republicans—would approve Gov. John Bel Edwards’ plan to solve the shortfall, which includes tapping into the Rainy Day Fund, or whether they had any alternative solutions to offer.

The governor’s plan calls for adjustments within the state budget—shifting finances, making cuts and using state reserves—but no new taxes or fees. The two most significant aspects of Edwards’ plan include plucking $119.6 million from the state’s Rainy Day Fund and $127.8 million in reductions and adjustments for the Department of Health. The proposed cuts, however, would spare K-12 education, higher education, waiver programs, the Department of Corrections, and the Department of Children and Family Services.

Not everyone is on board with the governor’s plan to solve the shortfall, including Republican lawmakers who oppose using the Rainy Day Fund and other short-term fixes. Edwards will need their support for his plan to pass, though. Two-thirds of both the House and Senate members have to approve taking money from the state’s reserves.

“Most Republicans are hesitant to use the Rainy Day Fund because they do not see any end in sight to the cycle of deficits. Is it really a rainy day if it has no prospect of ending?” says state Rep. Julie Stokes, R-Kenner. “That being said, all parties need to work together to be practical and find logical solutions to ending this once and for all.”

Stokes hasn’t ruled out the idea of using the state’s reserve fund, but she says meaningful spending reforms must come first. The 2015 and 2016 legislative sessions made very little progress in spending reform, she says, so the Legislature must prove this time around they will enact substantial changes to finally solve the deficit, and not put it off any longer.

“I am willing to use the Rainy Day Fund if we will do anything to show that we have the courage to stop the rain,” Stokes says.

Because the proposed state budget adjustments are all internal, outside business groups haven’t taken a stance on the session or the governor’s plan—at least not yet. The Baton Rouge Area Chamber declined to comment, saying it has no opinion at this time. The Louisiana Association of Business and Industry also says it has no immediate position, but adds it was still reviewing the plan and surveying its membership.

Dawn Starns, state director of the National Federation of Independent Business, encourages the Legislature to act as a business would when facing a deficit: By adjusting its budget. But this special session is largely the Legislature’s own battle to overcome, she says. Because the governor’s plan only concerns the state’s operating budget, it should have no direct impact on small businesses, Starns says.

“We’re leaving this in the hands of the Legislature and governor to figure out,” she says. “The state should cut and reduce spending where it needs to. But we don’t want to tread into how to do it. Just like we don’t want them to tell us what to do. We wish them the best of luck. It’s no small feat.”