As tax revenue from the oil industry have been decreasing, the deficit has swelled to $1.6 billion for the fiscal year that starts July 1, Bloomberg said. As a result, Moody's Investors Service and Standard & Poor's may lower Louisiana's credit rating unless sustainable budget solutions are suggested, Pravda.Ru says.Louisiana State University is a large, well-known public institution. The enrollment of the institution in 2014 totaled nearly 31,000 students. However, LSU is dealing with funding cuts of as much as 82 percent due to sharp decline in oil prices and fiscal mismanagement. Meanwhile, the hole in the budget of the state is evaluated at $1.6 billion, Pravda.Ru reports.
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Louisiana paid the price when it sold $335 million of general obligations Wednesday, its first deal this year. Borrowing costs jumped compared with an issue in November, with the yield spread more than doubling on some maturities.
The price of crude oil and natural gas generates 13 percent of Louisiana's revenues. Prices on hydrocarbons have plummeted about 40 percent since mid-2014. Fiscal strains eventually threaten to pinch funding for programs such as higher education.
A new study from AP shows that big gaps are becoming more the rule than the exception across the US.