ATLANTA -- Louisiana Gov. Edwin Edwards has ordered a spending freeze of at least $24 million in fiscal 1995 to bring expenditures in line with expected revenues when the new year begins July 1.
Edwards' action, taken on Monday, came after budget officials determined last week that supplemental revenues for the upcoming fiscal year would be only $503 million -- more than $20 million under the estimates cited by lawmakers when they passed the fiscal 1995 budget last month.
In addition, said Witt Cling, assistant commissioner of administration, the state could be forced to cover about $20 million in unanticipated expenses on court judgments against it.
Cling said the freeze on the $24 million will be lifted if the state's projection of revenues to be collected in fiscal 1995 shows improvement by the next official revenue estimate, which will take place in October. Because the freeze will affect spending "across the board," he said no programs will be immediately affected.
The budget official said the state is still determining how much it would have to spend to cover the court cases beyond $34 million already appropriated, but the amount could total more than $20 million.
According to the report prepared last Wednesday by the state's Revenue Estimating Conference, Louisiana can expect to collect $4.668 billion in general fund revenues during fiscal 1995, up from a $4.164 billion estimate in April. The $503.3 million difference reflects a renewal of expiring sales taxes and other actions of a legislative session that ended in May, according to Greg Albrecht, chief economist for the Legislative Fiscal Office.
Albrecht said that the conference certified only $503.3 million, not the larger amounts anticipated by lawmakers, because it was "not comfortable with recognizing revenues from additional audit efforts by the department of revenue." During the session, lawmakers approved funding for 36 new positions in the department's audit division, a move expected to generate increased tax collections, especially from large corporations.
A five-year revenue forecast submitted to the conference, meanwhile, projected modest growth in state revenues through the end of the decade.
The long-range revenue forecast is based on a number of assumptions, including the continuation of 4% taxes on food and utilities during the period and collection of taxes from casino gambling by the 1996 fiscal year.
Many in the state had expected a contract for the world's largest landbased casino to be in place in New Orleans by the end of the current fiscal year, but so far that has not happened. When it does, the state will collect a minimum of $100 million a year under legislation approved in June 1992.
Currently, opening of the casino is on hold after a ruling by Louisiana Attorney General Richard Ieyout in April, which held bidding would have to be reopened on a contract for the facility.
Ieyoub recommended that the state's gambling board rebid a casino contract awarded last July to Harrah's Jazz Co. because the current construction proposal awaiting the board's approval differs substantially from the one submitted originally.
The conference's long-range forecast also assumes that all allowable riverboat gambling facilities, 15 under current law, will be completed next fiscal year and will be operational by the end of fiscal 1996.
Riverboat gambling is expected to bring in $125 million in fiscal 1995, $139 million in 1996, $148 million in 1997, and then show 2% increases in both 1998 and 1999 to reach $156 million.
Video poker, permitted in the state since June 1992, is expected to bring in $115 million in each fiscal year from 1995 through 1999.
The conference determined that state revenues available for appropriation will grow by 6.1% between fiscal 1995 and 1996, exceeding both the expected state personal income growth rate of 5.58% and the projected inflation rate of 3.7%.
However, in the following three fiscal years, from fiscal 1997 through the end of fiscal 1999, revenue growth is not expected to exceed the personal income growth rate of 5.58% each year, though in each case it will surpass the inflation rate of 3.7% projected annually.
State revenues available for spending were projected to grow 3.8% in fiscal 1997, 4.446% in fiscal 1998, and 4.56% in fiscal 1999.
The revenue growth estimates project 7% annual growth in individual income tax collections, a 5% annual rise in corporate income tax receipts, and 4% yearly growth in general sales tax revenues.