Louisiana's budget a long-term solution: Jindal's office

Reuters News
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Posted: Jun 13, 2015 12:36 PM

NEW YORK (Reuters) - Louisiana's newly approved budget mostly relied on recurring revenues to close a $1.6 billion gap, a spokeswoman for the state's governor and possible presidential hopeful Bobby Jindal said on Saturday, responding to a credit analyst's view that it was heavily reliant on one-time measures.

The state's legislature on Thursday approved a budget that relies on some revenue-raising measures to close the projected shortfall, and includes education tax credits of $350 million.

Moody's analyst Marcia Van Wagner said on Friday the legislature closed that gap with a heavy reliance on short-term measures, meaning the state "will likely see continued large budgetary gaps next year, when it has to craft the budget for fiscal year 2017".

Kristy Nichols, the state's Commissioner of the Division of Administration, who is in charge of the state's budget and a spokeswoman for Jindal, said most of the revenues and savings were recurring rather than one-off measures.

"Louisiana did what it intended to do, which was to close the structural imbalance of the state's budget and to create long-term solutions that close that gap over the next 2-3 years and even further," said Nichols.

Nichols' office said $736 million in additional revenue was raised in this budget, of which $626 million was recurring, such as an increase in the tobacco tax.

The budget also included $464 million in recurring savings, Nichols' office said.

That cut the state's reliance on non-recurring revenue in half, to around $500 million compared with $1 billion in last fiscal year’s budget, Nichols' office said.

In total, the budget decreased from $25.8 billion in 2015 to approximately $25.1 billion, Nichols said in a statement.

Nichols added that they were expecting a "steady, firm, continuing increase in overall collections" for 2016.

Jindal, a Republican who plans to make an announcement this month on whether to join the crowded field of candidates seeking his party's 2016 presidential nomination, said in a statement on Thursday that the budget "protects higher education and healthcare without a tax increase".

(Reporting by Megan Davies; Editing by Digby Lidstone)