Jindal Administration Announces Mid-Year Budget Cuts

From a press release just in, the Division of Administration is announcing $171 million in budget cuts to address the budget shortfall brought on by the falling price of oil…

Today, Commissioner of Administration Kristy Nichols announced a mid-year budget reduction plan that addresses the state’s $171 million mid-year deficit while protecting critical services and higher education investments. The plan includes reduced costs across state agencies, strategic contract reductions, and the elimination of 167 non-essential vacant positions.

“Lower oil prices are good for Louisiana families at the gas pump, but they also mean that the state has less money to spend,” said Commissioner Nichols. “We worked closely with state agencies to create a responsible plan that balances the state budget without raising taxes and without affecting critical services.”

The plan includes $12.17 million from the elimination of 167 vacant positions. Those reductions were carefully selected to ensure that front-line providers, road maintenance workers, case workers and field staff were not impacted. Instead, the deficit elimination plan targeted mostly administrative positions that were not essential to critical services.

Commissioner Nichols said, “Eliminating the shortfall required agencies to take a realistic look at their budget for the year and make difficult decisions. In the end, we developed a plan that reflects the priorities of the administration and the state.”

While the Constitution allows 30 days for the administration to eliminate a deficit, this plan was announced the day the deficit was recognized by the Joint Legislative Committee on the Budget.  The administration’s rapid response to previous deficits has earned Louisiana stronger credit ratings. Earlier this month Standard & Poor’s said, “We believe the state has a strong budgetary framework embedded in balanced budget requirements, frequent revenue and expenditure forecast updates, and broad executive powers and a track record for prompt expenditure adjustments to eliminate deficits.” Among the factors in its rationale for its assigned rating, Moody’s cited Louisiana’s “flexibility to address unexpected budgetary developments mid-year.”

The savings from vacant positions is combined with $6.21 million from strategic contract reductions at the Department of Corrections, the Office of Juvenile Justice, the Department of Health and Hospitals, the Department of Environmental Quality, the Department of Education, the Department of Transportation and Development and the Department of Revenue. $10.9 million in savings was created by freezing non-essential spending in the November 7 expenditure freeze that included travel, supplies, operational and professional services. Another $18.4 million in other savings was identified within state agencies.  And $130.4 million in revenue was generated from the tax amnesty program and other sources that can be used to offset the mid-year deficit.

This, of course, is another round in the constant battle Nichols seems to be having with State Treasurer John Kennedy over the budget. The Jindal administration declared a budget surplus earlier this fall, that Kennedy immediately panned as a lot of hot air, and it was later admitted the surplus didn’t exist – which Kennedy responded to with a round of “I told you sos.” And now there’s a mid-year budget cut which will inevitably lead to even more grousing from Kennedy, plus a critique of the cuts as misguided or misprioritized.

And seemingly every year it gets worse, as the voters put more and more budget items under constitutional protection, making it more and more difficult to properly prioritize spending.

It’s becoming tiresome, isn’t it?

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