Paul Murphy / Eyewitness News
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BATON ROUGE, La. -- Louisiana's financial woes are expected to once again shape much of the political debate at the state capitol in 2013.

This is the fourth year a row lawmakers are wrestling with major spending reductions.

Finding $1.2 billion in cuts in an already lean and mean $25 billion state budget won't be easy.

'Our revenue is dropping continually,' said Senate President John Alario, R-Westwego. 'It makes for a very struggling budget plan, so we're going to have a difficult time this year.'

'$1.2 billion is going to be on the backs of higher education and healthcare,' said state Sen. David Heitmeier, D-Algiers.

Gov. Bobby Jindal said revamping the state tax code will be his top priority during the upcoming legislative session.

Alario said part of the plan is to lower corporate taxes while eliminating certain business tax breaks.

'One good example is in solar energy,' said Alario. 'We are giving a 50 percent credit rebate for that effort. It started out with a fiscal note of less than a million dollars. It looks like that's going to run to $30 million and projections are to go to $120 million.'

Heitmeier said he expects a lively debate over a President Obama-backed plan to expand medicaid coverage to adults up to 133 percent of the poverty level.

Jindal opposes the plan, saying it could end up costing the state nearly $4 billion over 10 years.

'If we do not accept the Affordable Care Act, it will have significant challenges on how to pay for the uninsured,' said Heitmeier.

Jindal has this to say about the state's budget prospects in 2013: 'As always, our budget will be balanced, won't raise taxes, will protect higher education and healthcare funding, and help foster an environment where businesses want to invest and create jobs.'

He also says, 'As a result of federal Medicaid cuts, we will continue to transform the delivery of healthcare in Louisiana by pursuing public-private partnerships that strengthen graduate medical education and protect patient care.'

Other items expected to be debated this year, college tuition and fee increases and the state voucher program recently struck down as unconstitutional.

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