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Louisiana sharpens budget ax. Legislature determined to prevent tax increase

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Louisiana is about to perform a disappearing trick that would cause its deficit -- a hefty one -- to vanish. There's nothing mysterious about the process, though. The Legislature is expected to do it by slashing the state budget. It is resisting raising taxes. And it has rejected the governor's pet solutions, casino gambling and a state lottery.

Plunging oil prices put Louisiana in a sorry economic state. In the wake of the crises, a number of large and intermediate petroleum-related businesses have failed, sparking an exodus of thousands of middle-class residents. Unemployment is at 13.2 percent, the highest in the country. Every dollar decline in oil prices brings Louisiana a potential loss of $30 million in revenue.

In the midst of this, the Legislature seems determined to bring its projected $871 million budget deficit to zero without raising taxes. The Senate has approved the new budget, which whacked spending by $437 million. The rest of the deficit is taken up by the elimination of dozens of state construction projects left over from last year.

This week, the House is also expected to approve the new budget, though it has so far been delayed by fierce lobbying to restore cuts in education, medical, and other human services programs.

``Despite the deficit, the budget for the state is, by everyone's agreement, per capita, one of the highest in the nation and it needed to be reduced,'' says James Michael, the director of the College of Business's research division at Louisiana Tech University, which monitors state tax issues.

``In the future we ought to be like other states. We'll have limited funding just as they do, and through a legislative process of elimination we can dedicate ourselves to the things that are critical in the budget. If we don't do that, Louisiana will not survive economically,'' Dr. Michael says.

Despite Gov. Edwin Edwards's statements that what the state really needs is more dollars coming in, supporters of the budget were encouraged last week when he announced he would not veto it.


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