The Associated Press

BATON ROUGE, La. – Louisiana’s budget woes worsened Friday, as the governor’s fiscal analyst told legislators expecting a surplus for the last fiscal year that the state actually may have a $113 million deficit.

”It looks very certain we’d have to institute some mid-year budget cuts to balance the books,” said Commissioner of Administration Mark Drennen.

The news was disheartening to the legislators on the Joint Budget Committee grappling in a state already strapped for cash and facing a huge shortfall in the new fiscal year that begins July, 2001.

”We ought to be able to do a better job with our money,” said Sen. Jay Dardenne, R-Baton Rouge, committee chairman.

Drennen outlined the preliminary report for the 1999-2000 fiscal year which ended in June. Though the fiscal year has ended, the books won’t be closed until December, when Legislative Auditor Dan Kyle compiles the final numbers. Drennen said his numbers are subject to change because of the audit.

For now, Drennen’s review shows the group benefits program for state employees short $48 million and tax refunds owed to corporate income taxpayers $51 million over budget, in addition to a host of other shortfalls that the state’s revenue income can’t cover.

But the total deficit equaled $67 million until the LSU Medical Center Health Care Services District said it overestimated its assets for the last fiscal year.

The health care division said it expected to collect $86 million from debtors but has deemed nearly $46 million of that money uncollectible.

That leaves the state in a $113 million budget hole from last fiscal year if the Legislative Auditor’s Office agrees that the LSU Med Center’s debts are uncollectible.

Under the state Constitution, a deficit from one year must be made up in the next; in this case, the 2000-01 budget that started July 1.

Gov. Mike Foster already has extended through Dec. 1 the hiring freeze he imposed in June. He has been extending it on a month-to-month basis.

But other budget cuts must follow, Drennen said.

Both Drennen and the legislators on the committee agreed something must be done to stabilize the group benefits program, which spirals over budget each year.

The benefits program finished the last fiscal year $48 million in the red and is headed for a $35 million deficit in the current year, Drennen said.

”Several weeks ago, we had $22 million in checks written with $800,000 in the bank. We’re broke,” said Sen. Tom Schedler, R-Slidell, a member of the group benefit program’s board of trustees.

Foster authorized the establishment of a study commission Friday to review the group benefits program, looking at lowering expenses, cutting benefits or raising premiums.

”This state funds a smaller percent of health benefits than any other state already,” Drennen said. ”It’s not a program you really want to cut much more.”