(Reuters) - Louisiana Governor John Bel Edwards presented a dire picture of the state’s fiscal situation on Thursday, urging lawmakers to consider a set of budget cuts and revenue-raising measures, including tax increases.
Edwards made his remarks before state legislators convene for a special session on Sunday to hash out how to fix the budget woes.
The state is contending with a $940 million budget deficit for the current fiscal year and a $2 billion projected deficit for the next fiscal year starting in July.
“This is a historic fiscal crisis, the likes of which our state has never seen,” Edwards said during Thursday’s televised address.
He warned that the state’s public colleges and universities will face “catastrophic cuts over the next four months.” Louisiana is at risk of not being able to pay student scholarships that have already been awarded, and some campuses will be forced to cancel classes, even file for bankruptcy.
“If you are a student attending one of these universities, it means that you will receive a grade of incomplete, many students will not be able to graduate,” said Edwards. “You can say farewell to college football next fall.”
The governor also warned that the state’s healthcare system was “on the verge of imploding.” Without new revenues, hospitals that care for a significant portion of poor and under-insured patients would close in places like Lake Charles, Alexandria and Bogalusa.
“I don’t say this to scare you. But I am going to be honest with you. No more tricks. No more smoke and mirrors,” said Edwards, a Democrat who took office last month.
Louisiana’s former Governor Bobby Jindal had signed a “no tax” pledge, which handicapped the state from raising new revenues. Edwards on Thursday juxtaposed Louisiana’s finances when Jindal took office in 2008 - when the state enjoyed a $1 billion surplus - to today, when the state is facing a looming $2 billion projected deficit.
The budget problems in Louisiana, a big oil-producing state, stem in part from the global drop in oil prices, in addition to the state’s reliance in recent years on one-time money and lower-than-expected revenues.
Edwards has proposed several budget fixes, including a 1-cent sales tax hike and increases to alcohol and cigarette taxes. He would freeze hiring for state workers, reduce state contracts, and cut $160 million of state funding.
He has also proposed tapping $128 million from the rainy day fund and $200 million from non-coastal BP payments to reduce the current year deficit.
Reporting by Robin Respaut; Editing by Leslie Adler