Gov. Jeff Landry’s recent tax overhaul will erase Louisiana’s previously predicted budget deficit according to new projections, Louisiana Illuminator reports.
The deficit, expected to be just shy of $600 million, threatened funding for health care services and higher education.
Louisiana’s Revenue Estimating Conference panel adopted new projections Thursday morning showing that the state’s funding for most government services won’t experience a dramatic drop off in the next fiscal year as initially expected.
The financial estimates are attributed to the higher state sales tax rate, which will offset individual income and corporate tax cuts taking effect Jan. 1.
The current budget was built on a $12.1 billion general fund, which funds the state’s K-12 schools, public higher education, prisons and health care. The new forecast has the same fund balance for next fiscal year, starting July 1, sitting at $12.1 billion.
Landry’s tax plan, passed last month by the Louisiana Legislature, will cut individual income and corporate taxes by $1.2 billion in the next fiscal year, according to the latest revenue projections. That reduction is offset by a boost of $1.3 billion in sales tax collections, largely thanks to an increase in the general sales tax rate from 4.45% to 5%.
