- The Washington Times - Friday, October 28, 2005

Financial officials in Louisiana say a budget shortfall this year is a certainty, given a loss of between $1 billion and $1.5 billion in state revenue because of two major hurricanes.

“There’s no way we’re not going to have a shortfall. About a third of our state’s economy is in the tank,” Jim Baronet, spokesman for the Louisiana Division of Administration, told The Washington Times yesterday.

“The tax base is gone,” Mr. Baronet said. “The devastation was so complete that there is no business, there are no utilities, no infrastructure in place, no customers. No economic infrastructure exists.”

He said Louisiana’s annual budget is about $12 billion and that the size of the budget hole should be known as early as today.

Asked whether steep spending cuts are likely, Mr. Baronet said: “Laws here may be different than in other states, but we have constitutional and statutory requirements against draconian budget cuts.”

He said tax increases have not been proposed, but he doesn’t rule them out.

“Taxes could be the only solution we have. If so, we’ll have to bite the bullet and do it,” Mr. Baronet said.

Elizabeth Guglielmo, chairwoman of the Louisiana Tax Commission, said the state Legislature is scheduled to convene in a special session Nov. 6 through Nov. 18 to consider fiscal alternatives.

Mrs. Guglielmo said Louisianans pay local property taxes but no state property tax. She said no discussion has involved implementing a state property tax to help pay for hurricane and flood damage from Hurricanes Katrina and Rita.

“There has been considerable discussion about how damaged property should be handled [for taxing purposes], but there is no consensus at this point,” she said.

Mrs. Guglielmo said some local authorities have suggested prorating taxes.

Meanwhile, Mississippi Gov. Haley Barbour, a Republican, is in Washington seeking $38 billion in federal assistance, said state Sen. Jack Gordon, chairman of the Senate Appropriations Committee, and Pete Smith, Mr. Barbour’s press secretary.

Mr. Gordon said Mr. Barbour also would ask that Mississippi be exempted from paying its matching share of Medicaid costs. A waiver would save the state $557 million in expenses, he said.

“If Congress does that, we’ll make it through, but if the government can’t help us with Medicaid, we’ll be in trouble,” Mr. Gordon said.

He pointed out that since Hurricane Katrina struck on Aug. 29, “we’re over $45 million below our [revenue] estimates.”

Those losses include $19 million in state sales tax revenue and $9 million in gambling fees and taxes, Mr. Gordon said. Multiply those deficits over a year, and the total is $336 million, he said.

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