State fiscal analysts did not spare the bad news when the Revenue Estimating Conference met Wednesday.
“Sales tax is stagnating,” Legislative Fiscal analyst Greg Albrecht advised, adding, “The employment numbers are so bad it’s going to bleed into those income tax numbers.”
Manfred Dix with the Division of Administration was a bit more understated with his pronouncements on the revenue downturns.
“A substantial downgrade in the corporate forecast is advisable,” Dix said, regarding the fact the state has paid out more in corporate tax refunds than it has collected in corporate taxes paid. “It is really bad.”
Dix also noted the state’s economy is far from enjoying the job growth promised by the previous administration.
“There is a significant deceleration of employment creation.”
Albrecht was blunt.
“For all practical purposes, Louisiana is in its own recession.”
Albrecht’s calculations proposed a $570-million drop in state income, while Dix’s numbers added up to a $632-million-dollar decline.
“We have to decide which one of these we want to go with: the absolutely awful pessimistic one, or the kind of awful pessimistic one,” REC chairman Jim Richardson said, eliciting rueful chuckles from the fiscal analysts.
Ultimately, the decision hinged on oil prices. Dix dropped the average annual price for oil to $40.44 per barrel, while Albrecht took it all the way down to $30.
“What I would consider to be a relatively conservative number at 30 is what we ought to do,” Commissioner of Administration Jay Dardenne urged. “That puts us in Greg’s camp, which is less pessimistic—put it that way—I wouldn’t say it’s optimistic. But I’d want to err on the side of hoping that if oil prices improve, then we’re looking more at a potential surplus, than yet a further mid-year cut.”
The state is required to pay more money than budgeted out for Medicaid, TOPS and K-12 education, and when that’s coupled with the now-acknowledged decline in revenue, the current shortfall stands at $870-million dollars for the budget year ending June 30th. The shortfall for the next budget year is now over $2-billion.
Lawmakers start meeting in special session Sunday, to try and find answers.