BATON ROUGE – Today, Governor Bobby Jindal announced that he has instructed cabinet secretaries and agency heads to enact across-the-board reductions to address the state’s $247.9 million mid-year budget deficit. Under the Executive Order issued by the Governor today, all budget units will receive the lesser of either a 7.56 percent reduction of state general fund dollars or a three percent reduction of all means of financing, which will result in a total reduction of less than one percent of total means of financing for the state.
Governor Jindal said, “When states face budget shortfalls they really only have two choices – we can either make things easier on government by raising taxes on Louisiana families, or we can work to make things easier for Louisiana families and simply force government to tighten its belt. We have chosen the latter. And every part of government must share in the cost-savings.
“Our budget situation is fundamentally different from the budget deficit situation in Washington, D.C. In Louisiana, our job picture continues to outperform the national and the regional economy – highlighted by the recent good news of a 6.7 percent November unemployment rate, the ninth best in the nation, down from the 7.4 percent unemployment rate in October. We are doing everything we can to make our state a place of business growth and job creation, and that remains our first, second and third priority. That is why we will deal with this budget deficit in the exact opposite way of Washington. We will shrink government instead of shrinking the income and jobs of our people. We are laying the foundation for a new Louisiana economy, and as it grows we will be in a position to invest in government programs that produce results, not simply restore funding to return us to the status quo.”
Following last week’s budget forecast by the Revenue Estimating Conference (REC), Governor Jindal made clear that he will not raise taxes on the Louisiana people to address the mid-year deficit, and instead, would force state government to tighten its belt to find savings and protect Louisiana’s economy. The Governor today reinforced the need to make the size of government more sustainable in the long term by identifying recurring savings that will also help address future budget challenges in FY11 and FY12.
Governor Jindal said, “We will not raise taxes. We know this would be the absolute worst thing we could do while we are working to protect the long-term health of our economy and Louisiana jobs. Every state in the nation is being affected by the recession – and just as Louisiana families and small businesses are tightening their belts and finding savings – so must government. We cannot expect to keep government spending the same and force the Louisiana people to pick up the government tab.
“We are also not going to use the Rainy Day Fund. We know we are facing a multiple-year budget challenge and that means we need to produce recurring savings that work to make government live within its means year after year. Our projected deficits for FY 11 and FY 12 mean that our current mid-year deficit must be a time to root out substantial savings that will help us down the road.”
When the state received its credit rating upgrades this year, one of the main areas Fitch and S & P focused on in their assessment was Louisiana’s responsible fiscal management, particularly with regard to the rainy day fund. Fitch said that it “believes that the state’s reserve position and focus on spending control support its ability to deal with future shortfalls.” S & P touted Louisiana’s “commitment to streamlining its government functions, as well as adopting budget management policies that allow the timely adoption of expenditure reduction measures.”
Governor Jindal also stressed the importance of paying back the Rainy Day Fund though the Tax Amnesty Program to help prepare for future years of budget challenges. The state projects even greater budget challenges in FY 12 – when the full FMAP reduction takes effect – and it is imperative to manage the budget responsibly so there are resources available to guard against dramatic reductions to critical services in the future.
The Governor also noted that the state would not use Tax Amnesty funds to address the midyear deficit, as that would not reduce the size of government to help address multiple years of budget challenges.
Governor Jindal added, “We are working toward a stronger and more accountable government, which is an absolutely critical goal as we, along with the rest of the country, prepare to face future budget deficits that will require government to be leaner and more efficient for years to come.”
The Center on Budget and Policy Priorities reports that a total of 48 states in the country faced budget deficits for 2010, and at least 35 states are projecting deficits for 2011. The National Conference on State Legislatures reports that new budget gaps have opened in at least 35 states since the start of fiscal year 2010 (23 states have already taken action on their mid-year deficits).
Statistics from the Center on Budget and Policy Priorities show that more than half the country – 26 states – has larger mid-year shortfalls than Louisiana. States are taking a variety of measures to address their mid-year shortfalls, for example:
- New York’s legislature passed a 12.5 percent across-the-board budget cut.
- Iowa has proposed a 10 percent across-the-board cut to state agencies.
- Alabama has proposed a seven to eight percent across-the-board cut.
- Colorado is releasing 1,000 inmates and cutting hospital provider rates.
- Indiana has proposed a 10 percent across-the-board cut to state agencies, including a $150 million cut to higher education.
Executive Order
EXECUTIVE DEPARTMENT
Executive Order No. BJ 2009 – 21
______________________________________________________________________________
EXECUTIVE BRANCH – EXPENDITURE REDUCTION
______________________________________________________________________________
WHEREAS, pursuant to R.S. 39:75(A)(1), the Division of Administration is directed to submit a monthly budget status report to the Joint Legislative Committee on the Budget (hereafter “Committee”) indicating the balance of the budget for the State General Fund and dedicated funds by comparing the official forecast for these funds to the total authorized appropriations from each fund; once approved by the Committee, the most recent budget status report becomes the official budget status of the State;
WHEREAS, if the most recently approved budget status report indicates that the total appropriation from any fund will exceed the official forecast for that fund, R.S. 39:75(B) requires the Committee to immediately notify the Governor that a projected deficit exists for that fund;
WHEREAS, by letter dated December 18, 2009, the Committee notified the Governor that it approved a budget status report at its December 18, 2009, meeting, indicating a projected deficit of two hundred forty-seven million, nine hundred eleven thousand, nine hundred ten dollars ($247,911,910) exists in the State General Fund for Fiscal Year 2009-2010, based on the revised official forecast of revenue available for appropriation adopted by the Revenue Estimating Conference on December 17, 2009, compared to total appropriations;
WHEREAS, once notified that a projected deficit exists, pursuant to Article VII, Section 10 of the Constitution of Louisiana and R.S. 39:75(C)(1)(a), the Governor has interim budget balancing powers to adjust the budget, including the authority to reduce appropriations for the Executive Branch of government for any program that is appropriated from a fund that is in a deficit posture, not exceeding three percent (3%) in the aggregate of the total appropriations for each Budget Unit for the fiscal year, and if the Governor does not make necessary adjustments in the appropriations to eliminate the projected deficit within thirty (30) days of the determination of the projected deficit in a fund, R.S. 39:75(D) mandates the Governor call a special session of the Louisiana Legislature for that purpose;
WHEREAS, as authorized by R.S. 39:75(C)(1)(a), I am exercising my unilateral interim budget balancing powers to reduce the projected deficit by $247,911,910, resulting in a less than 1% reduction in the total appropriation for the State;
WHEREAS, the allocation of the reductions are across the board to all Budget Units within the scope of my unilateral interim budget balancing powers resulting in the lesser of either a 7.56% reduction of the State General Fund or a 3% reduction of the total appropriation for each Budget Unit; and
WHEREAS, as authorized by R.S. 39:75(C)(3), my Executive Order may utilize all or a portion of the General Fund dollar savings objective specified in Executive Order BJ 2009-11.
NOW THEREFORE, I, Bobby Jindal, Governor of the State of Louisiana, by virtue of the authority vested by the Constitution and laws of the State of Louisiana, do hereby order and direct as follows:
SECTION 1: The following departments, agencies, and/or Budget Units (hereafter “Unit” and/or “Units”) of the Executive Branch of the State of Louisiana, as described in and/or funded by appropriations through Acts 10, 40, and 122 of the 2009 Regular Session of the Louisiana Legislature (hereafter “the Acts”), shall reduce expenditure of funds appropriated to the Unit from the State General Fund by the Acts, in the amounts shown below:
Act 10 and Act 122-General Operating Appropriations Act:
State General Fund
Schedule 01-Executive Department $7,740,854
Schedule 03-Veterans Affairs $637,278
Schedule 04-Elected Officials
04-139 Secretary of State $1,632,209
04-141 Office of Attorney General $619,232
04-146 Lieutenant Governor $122,053
04-147 State Treasurer $46,881
04-160 Agriculture and Forestry $1,554,442
Schedule 05-Economic Development $1,714,480
Schedule 06-Culture, Recreation and Tourism $2,188,047
Schedule 07-Transportation and Development $132,296
Schedule 08B-Public Safety Services $2,740,923
Schedule 09-Health and Hospitals $108,056,551
Schedule 10-Social Services $14,129,547
Schedule 11-Natural Resources $375,881
Schedule 12-Revenue $1,060,656
Schedule 13-Environmental Quality $321,667
Schedule 14-Workforce Commission $137,514
Schedule 16-Wildlife and Fisheries $7,561
Schedule 17-Civil Service
17-562 Ethics Administration $127,407
17-563 State Police Commission $19,671
17-564 Division of Administrative Law $29,306
Schedule 19A-Higher Education $83,961,506
Schedule 19B-Special Schools and Commissions
and 19D-Education $16,077,548
Schedule 19E-LA Health Care Services Division $2,454,084
Schedule 20-Other Requirements
20-906 District Attorneys & Assistant District Attorneys $913,868
20-909 LA Health Insurance Association $60,000
20-933 Governor’s Conferences and Interstate Compacts $16,000
20-945 State Aid to Local Government Entities $1,034,447
SECTION 2: A.No later than January 8, 2010, the head of each Unit listed in Section 1 of this Order shall submit to the Commissioner of Administration (hereafter “Commissioner”) a mid-year budget reduction plan, on the BA-7 form and questionnaire, which reflects the Unit’s proposed allocation of the expenditure reduction ordered in Section 1 of this Order (hereafter “mid-year budget reduction plan”), and a description of the methodology used to formulate the mid-year budget reduction plan. The heads of each department shall exercise discretion to allocate the aggregate reduction within the department to maximize recurring savings to the State for future fiscal years, while remaining in compliance with R.S. 39:75(C)(1)(a) by ensuring that no reduction to any Budget Unit exceeds 3% of the total appropriation of that Budget Unit.
B. In the event that positions of employment will be affected by the mid-year budget reduction these positions should be included in a Unit’s mid-year budget reduction plan.
C. No Unit shall implement the expenditure reduction mandated by Section 1 of this Order without the Commissioner’s prior written approval of the Unit’s mid-year budget reduction plan.
D. After the Commissioner has given approval of a Unit’s mid-year budget reduction plan, any change to the mid-year budget reduction plan requires prior written approval from the Commissioner.
SECTION 3: The Commissioner of Administration is authorized to develop additional guidelines as necessary to facilitate the administration of this Order.
SECTION 4: All departments, commissions, boards, offices, entities, agencies, and officers of the State of Louisiana, or any political subdivision thereof, are authorized and directed to cooperate in the implementation of the provisions of this Order.
SECTION 5: This Order is effective upon signature and shall remain in effect through June 30, 2010, unless amended, modified, terminated, or rescinded prior to that date.
IN WITNESS WHEREOF, I have set my hand officially and caused to be affixed the Great Seal of Louisiana, at the Capitol, in the city of Baton Rouge, on this 22nd day of December, 2009.
/S/Bobby Jindal____________
GOVERNOR OF LOUISIANA
ATTEST BY THE GOVERNOR
/S/Jay Dardenne____________
SECRETARY OF STATE
