When the price of a barrel of oil decreased, budget cut predictions once again surfaced for Louisiana higher education. 

“The price originally used to calculate the revenues for this fiscal year was $95.80 per barrel. The price of crude oil has continued to fall and has been hovering around $60 per barrel for the past week,” according to the article “Dropping oil prices continue to impact state budget” in The Advocate. 

The prediction of having a budget cut on higher education is based on this drop of oil prices.

Oil prices are used to calculate severance, taxes and other royalties that the state government collects. 

The article “State may have to change spending plan a second time” found in The Advocate tells that The Revenue Conference expected to collect $10.6 billion in collection from taxes, fees, royalties and other revenue sources for the current fiscal year. Current predictions have changed the estimate to a collection of $171 million less.

One positive prediction is that sales and personal income taxes are a larger portion of the state general fund pays for services such as health and higher education. 

One article that helps to explain the basics of why oil prices effect the economy of Louisiana is “Louisiana is going to have another round of budget cuts: Answers to common questions” found on the nola.com website. According to the article, “[The] sales tax for the year—at least so far—looks like it might be a bit higher than originally expected. Still, for every dollar the average price of oil per barrel drops, Louisiana state government loses around $10  to $12 million. A slight uptick in sales tax collections will not make up for the large drop in oil prices.”

Over the years, laws have been implemented into the Louisiana constitution, causing difficulty for budget cuts due to legal constraints. Some areas such as funding for nursing homes require that two-thirds majority vote of the legislature to change the budget. Currently, higher education has no bar blocking cutting from colleges and universities. 

According to sources such as nola.com, The Sunday Star, The Advocate and The New York Times, the higher education of Louisiana has taken $673 million out of the budget for public colleges and universities since 2008. With the state trying to make up a projected $1.4 billion shortfall in revenues for the 2015-16 budget, predictions from legislators and higher education officials say that this total could reach closer to $380 million. 

If oil prices continue to fall, the predicted deficit could grow. 

Gov. Bobby Jindal is meeting with the Revenue Estimating Conference on Jan. 26 to determine how much money Louisiana’s government has as well as having the Governor’s Executive Budget proposed to the legislature on Feb. 27.