Lawmakers consider what to do with state’s budget surplus
Published 9:42 am Saturday, April 1, 2023
By Emily Burleigh
Louisiana lawmakers will be entering this legislative session with a historic $1.6 billion surplus.
The state has a surplus of $727 million leftover from the 2021-22 fiscal year and $925 million in this year’s excess general fund. After depositing a quarter of the surplus into Louisiana’s rainy-day fund and putting ten percent towards the retirement debt – as required by the Louisiana Constitution – that will be approximately $473 million for legislatures to utilize.
The landscape of the upcoming legislative session was discussed by Sen. Gerald Boudreaux, Chairman of the Senate Democratic Caucus, Sen. Page Cortez, President of the Senate, and Rep. Jack McFarland, Chairman of the Louisiana Conservative Caucus, during a panel hosted by the Public Affairs Research Council of Louisiana on Friday.
Cortez stated that infrastructure projects that are currently in progress should be prioritized, as many have found themselves over budget.
“Because of the costs of projects going up and inflation, we need to consider those projects we already have in the pipeline… giving them the sums of money they need to actually make those projects come to fruition, because they cost more than they were originally expected to cost last year,” he said.
This is in alignment with Gov. John Bel Edwards’ budget proposal, which allocated $497.4 million towards transportation projects – $340 for road and bridge work and $157 for general transportation projects.
Boudreaux echoed this. “We have so many projects right now that if we don’t put the extra dollars towards those, they’ll never happen.”
In order to maximize the use of surplus funds, legislators will have to prioritize increasing Louisiana’s annual expenditure limit.
Cortez is in favor of increasing the cap so that funds can be used to “improve the services that the state provides, rather than just letting it flow into the rainy day fund.”
Boudreaux agreed. “You would be doing a disservice to the constituents who pay those taxes to say, ‘well, I’m just going to put them in a savings account instead of just giving you the services that you should expect,” he said. “When we talk about the improvements to the state, when we talk about healthcare, when we talk about education, what we’ve been able to do, that should not be lost in this last budget cycle.
McFarland also agreed that the increased cost of projects due to inflation is an issue, but expressed concern over exhausting surplus funds and increasing the expenditure limit with a fiscal cliff on the horizon. It is projected that the state general fund revenue will decrease to $11 billion by fiscal year 2025-26, a $450 million drop from the funds available in the upcoming budget year.
The 0.45 percent state sales tax is set to end in 2025. The Legislative Fiscal Office estimates that without the sales tax, Louisiana’s state general fund tax collections will decrease by approximately $418 million a year. Additionally, a slice of taxes from new car and truck sales will be distributed to a transportation fund dedicated to road bridge work.
McFarland stated that these numbers won’t be finalized until August, which raises concerns amongst the Conservative Caucus. “I’m hesitant because some of the things that’s going to influence our financial wellbeing going forward, we still don’t know all the impacts.”
The 2023 Louisiana Legislative Session is set to begin on April 10.