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 Louisiana faces a projected shortfall of $750 million this fiscal
year and the gap is expected to grow to $1.9 billion in the next
fiscal year beginning July 1 from deteriorating tax revenues and a
drop in oil prices.
Edwards, a Democrat who took office earlier this month, wants to add
1 cent to the state's existing 4-cent sales tax, excluding the
purchase of groceries, prescription drugs and residential utilities.
The proposed measure is expected to raise $216 million by late June.
The plan also taps $128 million from the state’s rainy day fund and
$200 million paid by Plc to reimburse cleanup efforts following the
2010 Deepwater Horizon oil spill. The state would also cut some
discretionary funding.
If enacted, the governor's plan would reduce but not eliminate the
deficits the state faces.
 “The days of using budget gimmicks that helped us limp along are
over,” said Edwards, the first Democrat to hold the office of
governor in Louisiana since 2008. “This administration will remove
the smoke and mirrors and provide the facts of where we are and
where we are going.”
Edwards warned that if leaders did not act quickly, universities
could struggle, distressed hospitals could close, and public
education could suffer severe cuts.
“Raising taxes is not my first, second, or even third option when
seeking to fill the state’s budget shortfall,” said Edwards.
"Unfortunately, those cuts will not be enough to bridge the enormous
shortfall we face today.”
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The state's overall budget problems stem from the drop in oil
prices, but much of the shortfall also comes from previous excessive
use of one-time money and lower-than-expected revenues, the
governor's office reported.
Louisiana is now contending with years of unresolved structural
budget deficits that have collided with a weakening state economy
and a sharp drop in revenues from oil and gas extraction taxes,
Moody's Investors Services said in December. Moody's rates Louisiana
Aa2 with a negative outlook.
During Edwards' inaugural address last week, he pledged to begin
accepting federal funding to expand healthcare to residents through
the Affordable Care Act, also known as Obamacare.
(Reporting by Robin Respaut)
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