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Budget concerns mount amid oil decline
State Sen. Neil Riser said he wanted to wait and see what the final, year-end oil numbers looked like before sounding an alarm, but falling oil prices have state officials scrambling to prepare for a possible $1.3 billion shortfall in the next fiscal year.
Last week, Gov. Bobby Jindal projected the deficit for fiscal year 2009 as a result of oil prices falling below $80 a barrel.
The $80 a barrel benchmark is important because that's the number state budget estimators used when they established revenue estimates — a large portion of which come from oil and gas royalties.
Jindal said continued declines in oil prices would mean trimming fat and eliminating spending to match revenue declines.
However, Riser said it is still premature to discuss cutting programs.
"I want to see the year-end numbers," said Riser, R-Columbia. "These oil numbers are based on the yearly average and not the day-to-day price."
Oil has fallen from a height of near $150 a barrel, trading in the mid-$70 range on Tuesday. Riser said that still means the yearly average for oil prices is well above the $80 mark, so right now the state's finances are sound.
Still, Riser agreed that a more conservative hand will be needed when lawmakers come into session next year to begin crafting the budget.
"Personally, I'd just like to go through the budget, line by line, and see what it is," Riser said. "No body wants to see their program cut, but cuts will have to be made."
State Rep. Andy Anders said he also believed officials were "jumping the gun" in their initial projections.
Anders noted, though, that low oil prices could be a good thing for Louisiana.
"The price of oil needs to stay down, with everything the economy is doing, especially with the hits farmers and local businesses have taken," said Anders, D-Vidalia. "A shortfall down there can really affect us too."
Riser echoed that sentiment.
"Even though $140 a barrel is good for the economics of the State of Louisiana, it's not good for the individuals who are putting gas in their cars," said Riser. "Lower oil prices are bad for the budget but good for the taxpayers."
State House appropriations committee chairman Jim Fannin said the $1.3 billion shortfall is a reality and cuts will probably have to be made — but oil prices won't be the primary cause.
"We've had three or four years of high sales taxes because of Katrina and Rita," said Fannin, R-Jonesboro. "Now we have kind of a double-whammy because the economy is weakening and the sales taxes are leveling off."
Fannin noted current revenue estimates are based on $74 a barrel for the upcoming fiscal year, so Fannin said the state's finances are secure but $1.3 billion less will mean cuts.
"If you spread it across a $30 billion budget, then we'll be able to work through it," Fannin said. "We just won't be able to increase the number of people we're helping in the health area and we won't be able to increase the dollars in education like we have for the last few years."
Riser said if cuts are made, he'd like to see them across the board — with the notable exception of one state department.
"I want us to maintain our education dollars and cut elsewhere," Riser said. "Education is already stretched and it's too important to us to start cutting money there." |
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