ATLANTA -- Gov. Buddy Roemer plans to sign Louisiana's $4.59 billion 1992 general fund budget passed this week by the state Legislature, but only after he vetoes about $100 million in spending, a key state official said yesterday.
Dennis Stine, commissioner of administration and finance, said there also could be some cuts in capital spending approved by the lawmakers for fiscal 1992, which began July 1. Those cuts would affect authorization for $678.4 million in state and federal cash outlays and $693 million of bonds for building projects.
Gov. Roemer had threatened to veto altogether the appropriations bill that legislators approved Monday. Such an action would have thrown the state government into disarray at week's end when the first payroll of the new fiscal year is due. However, the governor has decided line-item vetoes can result in sufficient spending reductions, and he now plans to sign the budget on Friday, said Mr. Stine.
"The budget will be signed, following substantial vetoes of individual line items," Louisiana's finance director said. "The governor's feeling is that we are spending too much money."
Mr. Stine declined to be specific about the anticipated cuts, saying only that pay raises for state employees, which would have cost Louisiana $38 million in fiscal 1992, would likely be trimmed.
The spending cuts would allow the state to preserve about $100 million of the $437 million cash surplus with which the state began the fiscal year, he said. As passed by the Legislature, the 1992 budget would have maintained a cushion of only about $4 million, leaving the state without much fiscal flexibility. In fiscal 1991, the state covered an operating deficit by drawing down its $702 million reserve fund surplus by $265 million.
"Maintaining a reasonable cash surplus is very important to this administration," Mr. Stine said.
"I expect that tens of millions of dollars will have to be vetoed in the bill," said Gov. Roemer in a prepared statement. "There are a number of recurring expenses that are met on a one-time basis. That is not satisfactory."
Officials at the major rating agencies said that Louisiana's accumulation of a budget surplus has been viewed as an important aspect of its improved fiscal health. Accordingly, they said, a complete drawdown of that surplus would not reflect favorably on the state.
"The Legislature has thrown the [budgetary] monkey on Gov. Roemer's back, and we will have to see how successful he is in maintaining some of the budget surplus," said Jay Abrams, a vice president at Standard & Poor's Corp.
"The surplus is one of several things Louisiana has had going for it as it has improved, but it may prove difficult to rebuild that surplus," Mr. Abrams said.
"I need to know more details before coming to a conclusion, but if the state uses up the surplus and continues an operating deficit, it could obviously be a problem," said George Leung, managing director of state ratings at Moody's Investors Service.
Standard & Poor's upgraded Louisiana's $2 billion of general obligation bonds in December to an A from BBB plus. Moody's continues to rate the state's GOs at Baa 1.
In working out the final details of the budget on Monday, House and Senate negotiators agreed to give state employees, excluding teachers, raises ranging between $400 and $600 a year, compared with a $1,000 increase proposed by the Senate.
In other legislative action, the lawmakers legalized riverboat gambling and video poker machines, while they rejected landbased casino gambling. The new gambling authorization follows legislative approval last year of a state lottery, and it could eventually add about $90 million a year to the state's general fund. However, lawmakers are not allowed to budget the funds until they are actually received.
The 85-day regular session follows a special weeklong meeting of the Louisiana Legislature earlier this month, during which about $315 million in expiring taxes were reinstated, heading off what would have likely been a fiscal crisis for the state.
