BRADENTON, Fla. - Louisiana legislators ended a three-week special session Wednesday after failing to find all of the funds to correct the state's historic budget crisis.
Measures adopted by lawmakers, which include a short-term one-cent sales tax increase and savings from a general obligation bond refinancing plan, left Louisiana $30 million short of closing the $940 million gap for the current fiscal year, ending June 30.
For fiscal 2017, the state faced a $2 billion deficit, and remains $800 million short of closing it.
Gov. John Bel Edwards said he was disappointed with the Legislature's response to the state's fiscal problems, and he would begin revising downward his recommended budget for the fiscal year that starts July 1.
"We didn't do a very good job over this last three weeks," Edwards said at a press conference after the close of session Wednesday. "We have not yet achieved structural reform."
On Feb. 25, while lawmakers were in session, Moody's Investors Service downgraded all of Louisiana's ratings one notch, citing years of budget imbalances, declining state revenue, and the looming deficit.
The action impacted $7.3 billion of outstanding debt.
Moody's, which has placed a negative outlook on Louisiana's debt for a year, said that outlook was maintained to reflect continued budget risks and the likelihood that returning structural balance would take time.
"I have to imagine that when Moody's takes a look at what happened here today they are not going to be impressed," Edwards said. "And when they see the revenues that were voted on, even though they are $800 million short, it's of short duration."
Edwards also said the state had received letters from the Southern Association of Colleges and Schools, an accrediting body, citing "concern" about the state's funding level for higher education.
Although funding was found to protect the state's universities from huge budget cuts in the fiscal 2016 budget, questions remain about cuts in next year's spending plan.
Moody's has eight of Louisiana's public universities on review for downgrade due to anticipated budget reductions.
In addition to a temporary sales tax increase of one cent, lawmakers made $160 million in budget cuts and redirected $200 million from the state's Deepwater Horizon settlement to the general fund.
They also increased taxes on tobacco, hotel rooms, alcohol, and car rentals. Some tax breaks for businesses were reduced.
Details on the bonding plan were not immediately available, although bill documents state that $80 million in savings is anticipated from refundings would go toward eliminating deficits in fiscal 2016 and 2017.
For the most part, disagreements between the House and Senate prevented more thorough work on other legislation such as removing exemptions from the sales tax.
Lawmakers did pass a resolution creating a tax reform study committee that will release recommendations in September.
Edwards said he would detail in coming weeks the large-scale cuts that he will recommend in his 2017 budget.
"Without structural reform those cuts will almost surely be concentrated to a degree among higher education and health care," he warned.
Edwards began his press conference noting that in addition to the budget, he'd also been dealing with the historic flooding in Louisiana that killed four people and required him to declare a disaster declaration for 16 parishes.
The special legislative session, he said, was also "somewhat of a disaster."
