Louisiana’s Revenue Estimating Conference forecast a sharp reduction in state revenues for the rest of this fiscal year and into the next.
Louisiana’s revenue forecast dropped $197 million Thursday, driven by plummeting state sales taxes as shoppers shut their wallets and businesses shrink spending in the tight economy.
The state income projecting panel, the Revenue Estimating Conference, revised tax collection estimates sharply downward for the current fiscal year that ends June 30, continuing a recent trend of forecast revisions to reflect drops in tax collections.
Thursday’s changes create a deficit in the $29 billion budget that must be closed in the coming weeks.
Economist Greg Albrecht said sales tax revenue has slumped, and the uptick in severance and royalty money from oil prices isn’t enough to combat it. Albrecht, the chief economist for the Legislative Fiscal Office, said he projects a more than 14 percent decrease in sales tax collections compared to last year — and he said that could get worse.
“There’s just a massive retrenchment of spending for households and businesses,” said Albrecht, whose revenue projections were selected by the conference as the official forecast. “People just aren’t spending.”
Estimates of business tax collections also were cut, along with revenue from gambling taxes.