The state of Louisiana is facing a $400 million to $700 million budget deficit next year due to the expiration of temporary sales taxes. Governor Jeff Landry proposed a tax cut to make up for the budget shortfall next year. The tax cut could lead to budget cuts in higher education.
If a 45 cents sales tax that is set to expire on June. 30, 2025, isn’t renewed, then higher education institutions will have to prepare for a $250 million reduction across all systems. Around 30% of the university’s money is from the state and the other 70% is generated by the university itself. This decrease will affect universities like the University of Louisiana at Lafayette in their operational budget.
The operational budget includes payments to vendors for goods and services, payment to employees, payment for employee benefits, student services, scholarships and academic support, among other things.
According to NOLA.com, Rick Gallot, the president and CEO of the University of Louisiana System told the Board of Regents that additional budget cuts would be “devastating to all nine of our institutions.” Cuts could result in a reduction in scholarships, program reductions, layoffs and an increased workload for staff after cuts.
A reduction in scholarships includes TOPS, GO Grants, RCP, the Patriot Scholarship and GO Youth Challenge, meaning students would receive lower awards and stipend amounts. Enrollment numbers are a cushion for universities like UL Lafayette, but they aren’t outstanding enough to completely offset the loss from the budget cuts.
As far as the construction of the new engineering building, Scott Hebert, director of Facility Management for UL Lafayette, said the construction would remain uninterrupted by any changes in the university’s budget. “The sales tax money he is proposing to cut is affecting the operational budget that is transferred to each university from the state. It is totally separate from the construction budget or the capital outlay funding that each university or state agency gets. Two separate sources of funding.”
The money allocated for the building project is provided by the state and approved during the legislative session in June. The project is run by the office of Facility Planning and Control (FPAC). FPAC are the program managers for the project and the university is the user agency, which provides feedback, daily oversight and reports problems.
Hebert described the progress they have made so far with the building.“We have done all of the drawings. We have started phase one work, which is the underground work. Relocating all the existing utilities that were going to be underneath the new building,” Hebert said.
“That should take us probably most of next semester to get worked out and completed. Then we would be ready to break ground very close to May or June on the actual building slab.”
The project is projected to be completed two years from the start of the build, which is around May or June of this coming summer.
Hebert asserted that “the project is moving forward. We are excited about it. I know the engineering department is excited about it, and they are making good headway right now.”
On Nov. 6, Landry and the Louisiana State Legislature began a special session on the state’s current tax system. An important part of the proposed tax system focuses on cutting income taxes based on income and creating a flat tax rate. All residents with an income above $12,500 would pay a 3% income tax instead of one specific to their tax bracket.
Another important part of the new tax plan was the expansion of the sales tax to other items and services such as lobbying, dog grooming and car washes.
These new plans along with others are supposed to fill the hole left by the shortfall. The session will end no later than Nov. 25.
The Board of Regents is a state agency responsible for coordinating all public higher education in Louisiana.
They administer the funding formula and set guidelines for campus budgets among other duties.
On Sept. 24, the Board of Regents held their annual higher education budget hearing. During which, they discussed ways to utilize this year’s appropriated funds and develop a plan to accommodate for the reduction.