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Weathering the (budget) storm

Governor John Bel Edwards is working with leaders across the state to tackle the estimated $750 million budget shortfall.

The state legislature will be called into a three-week special session in February to address the crisis in Louisiana’s budgets for Fiscal Years (FY) 2016 and 2017. Higher education systems across the state have been asked to come up with plans to make $38 million in mid-year cuts as a contingency in case Gov. Edwards and the legislature can’t agree on ways to fill the $750 million state budget hole.

The impact of these potential cuts to the Louisiana Technical & Community College System is unclear. At this time, leadership at Bossier Parish Community College (BPCC) is working to determine the possible impact reductions might have on college operations.

New BPCC LogoThroughout the last eight years, BPCC has weathered significant financial challenges while remaining committed to serving students and meeting the workforce demands of business and industry in Northwest Louisiana. A statement from BPCC says they have not only grown their enrollment numbers, but have enhanced the quality of services offered, attributing that to a dedicated, hard working faculty and staff.

“We will continue working with our legislative delegation and our partners in business and industry to find solutions to both our current and our long-term budget issues,” says BPCC Chancellor Rick Bateman, Jr. “Despite the challenges before us, I am confident that we will continue to identify innovative solutions that provide Northwest Louisiana with high quality educational services that strengthen our regional economy and our communities.”

Edwards has already released a plan that will avoid the $131 million in cuts to higher education if legislators pass revenue measures that includes tapping the rainy day fund to the tune of $128 million and using BP oil spill settlement damages to bridge the shortfall. The plan university officials are being asked to submit is a backup plan in the event the Legislature does not approve new revenues to close the shortfall.

For the short-term, the Governor provided a list of revenue options identified to cover the $750 million budget hole left in the last six months of this year. A majority of proposals for the current fiscal year are made up of non-revenue raising measures. This follows on the heels of a previously-identified $487 million budget gap patched in December 2015. The options for the current fiscal year include using the state’s Rainy Day Fund; redirecting non-coastal dollars from the first year of BP oil spill payments to the state; and cutting at least 10 percent from $1.6 billion in discretionary state funds that are dedicated to certain uses in statute, but not constitutionally protected.

“Raising taxes is not my first, second, or even third option when seeking to fill the state’s budget shortfall,” Governor Edwards continued. “We will begin with painful, across-the-board cuts to a wide range of discretionary state funds. Unfortunately, those cuts will not be enough to bridge the enormous shortfall we face today and in the next fiscal year. We must enter a season of shared sacrifice – enormous sacrifice – to fix the systemic budget problems in Louisiana. If we do this hard work together, Louisiana will emerge stronger over the long-term.”

In addition to spending cuts and the use of other non-revenue raising measures, which make up a majority of the short-term plans, Gov. Edwards’ plan includes a bridge to future long-term structural budget improvements. This bridge would add one additional cent of state sales tax to the existing four-cent state sales tax, excluding the purchase of groceries, prescription drugs and residential utilities. The proposed measure would raise $216 million before June 30, 2016.

Addressing the $1.9 billion dollar budget shortfall predicted for next budget year, Gov. Edwards is offering a menu of options to legislators, including many that would provide long-term structural fixes for the way Louisiana funds state government.  While the drop in oil prices contributes to the overall budget problem, a majority of the shortfall comes from previous excessive use of one-time money and lower-than-expected revenues. These long-term options include a linked package of changes to the income tax brackets in Louisiana; cuts in the percentage of federal excess itemized deductions Louisiana taxpayers can deduct on their state tax returns; and a proposed constitutional amendment to eliminate the deduction for federal income taxes paid in exchange for lowering individual and corporate tax rates.

In addition, Gov. Edwards has directed each member of his cabinet to submit proposals for budget reductions based on a minimum 10 percent reduction, as well as a budget that would reflect the current financial conditions without additional revenue.

Other long-term proposals, some of which would provide additional assistance in solving this year’s budget shortfall, include: raising the tobacco tax to $1.08 per pack of cigarettes, raising other excise taxes, reducing tax credits, and other proposed changes to the way corporations and businesses are taxed.

“It is now more important than ever for our state’s leaders, citizens, and stakeholders to come together to solve this problem. The last eight years of bad budgeting and annual cuts to vital services have left us in a fragile position. There is no sugar coating that fact,” Gov. Edwards said. “We must fix this or continue catastrophic cuts that would result in our hospitals closing, universities and community colleges filing for bankruptcy, the erosion of the TOPS scholarship program and severe reductions to our public K-12 schools. We can do better for our working families, students and businesses than we have in the past. My administration welcomes all constructive engagement in this process. Together we will meet this challenge, stabilize our budget, and build a solid foundation for our state’s future.”

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