Louisiana Treasurer John Kennedy said a potential $300 million cut to the state’s universities “would gut them.”
“I don’t know how they can do it without massive layoffs,” Kennedy said Friday morning in a wide ranging interview with The News-Star.
And Kennedy said the predicted $1.4 billion hole in next year’s budget could swell to $1.6 billion if oil prices remain below $75 through next summer. The 2016 fiscal budget begins July 1.
“If that becomes the new normal, we’ll face a deficit of at least $1.6 billion, and that’s being conservative,” he said.
Each $1 drop in a barrel of oil costs reduces the state’s revenues by about $12 million.
“Our $220 billion economy is much more diverse than it used to be, but 40 percent is still tied to fossil fuels,” Kennedy said.
The treasurer said he hopes Gov. Bobby Jindal “can carve out some time for us in Louisiana to help us fix our budget problem.”
“I think it’s clear Bobby is running for president, and I wish him well,” Kennedy said. “But I’d like to see him use some of his considerable talents to multitask.”
Kennedy said he believes Jindal’s division of administration has lost some steam after mitigating years of cuts to higher education by using one-time money to plug budget holes.
“I’m starting to sense the division of administration is kind of tired,” he said. “They’re out of tricks, gimmicks and smoke and mirrors, and that’s why they made the statement about the higher education cuts.”
Kennedy said Jindal will likely try to reduce the deficit by not funding inflation increases or merit raises, finding $100 million to $200 million in savings provided by a consultant and another tax amnesty, “which I think would be a huge mistake because we’re just borrowing from ourselves,” he said.
“But even if you get the maximum from all of that you’re still looking at what I believe will be a $700 million to $800 million deficit,” the treasurer said.
Kennedy said if he was governor he would immediately write a letter to all third-party consultants contracted with the state and ask for a 10 percent discount.
“I’d provide the postage through my budget,” he said. “I think most of them would take it to keep getting paid.”
Kennedy said the administration has spent “an enormous amount of money” on computer contracts in recent years.
“We spent $140 million on a new website for the Department of Children and Family Services to make it more convenient for people with food stamps,” he said. “I’m sure it’s helped, but I don’t think it should have been a priority. I’d like to have some of that money back.”
Follow Greg Hilburn on Twitter @GregHilburn1