Economy the No. 1 concern

• By MICHELLE MILLHOLLON
• Advocate Capitol News Bureau
• Published: Oct 17, 2008 - Page: 1A - UPDATED: 12:05 a.m.

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Gov. Bobby Jindal said Thursday that he is trying to get in front of the U.S. financial crisis by holding weekly meetings with aides on the state’s economy.

For now, Louisiana appears to be better positioned than the rest of the country, he said.

“It’s important for us to be continually vigilant and proactive,” Jindal said.

The governor recently launched regular meetings with Cabinet members on the impact of the national meltdown on the state.

He plans to meet once a week with revenue, budget, labor, economic development and natural resources officials.

Last month, economists warned state officials that income tax collections are declining and that sales tax revenue is flat.

However, the state also has an $860 million surplus from the spending year that ended in June. The surplus partially stems from oil prices that at one time hovered around $150 a barrel.

Commissioner of Administration Angèle Davis said high oil prices largely buffered the state from the credit crisis and the economic uncertainty.

“Overall, Louisiana’s economy is still strong. I think that we’ve shown remarkable resiliency against troubling economic trends,” she said.

Oil prices now are falling, she noted.

At midday Thursday, the price of oil was more than $10 below the $84-per-barrel price built into the current state operating budget.
Davis said state officials need to be aware of:

• Oil prices, which generate substantial revenue for state government.
• A possible $200 million in state expenses for responding to hurricanes Gustav and Ike.
• A projected $1.3 billion budget deficit for the spending year that starts July 1.
• The $300 million that the state has to pay over the next two years for levee construction.

State Rep. Jim Fannin, D-Jonesboro and chairman of the appropriations committee, said Louisiana is not isolated from the rest of the nation’s problems.

He said officials need to stay on top of the situation.

If the price of oil remains less than $84 a barrel, there could be budget shortfalls in the current state spending year, Fannin said.
Davis said she will get concerned when the price of oil dips below $60 a barrel.