Louisiana budget faces looming cliff as federal COVID, disaster funding ends
Published 1:56 pm Saturday, April 22, 2023
The Center Square) — Louisiana’s finances are at a critical juncture as the state prepares for the end of federal funds from the pandemic and disasters.
The budget enacted this year will either help to create new opportunities and more jobs, or increase the spending burden on residents, driving businesses, jobs and citizens out of the state.
The situation prompted the Pelican Institute to launch a Citizen’s Guide to the Louisiana Budget on Tuesday to help educate residents on the complex and growing budget, as well as the need for reform.
“State budgets might seem boring and complicated, but a responsible budget is central to writing Louisiana’s comeback story,” said Daniel Erspamer, CEO of the Pelican Institute. “If we take the wrong course, we’ll burden the future with massive debt, higher taxes, and a dismal economy. Take the right course, and we’ll head toward more jobs and better opportunities. That’s why it’s so important for every citizen to understand what’s at stake in the budget.”
Louisiana’s budget has grown by 63% over the last decade to $47 billion in fiscal year 2023. The recommended $50 billion budget for next year will be compounded by the end of federal pandemic and disaster funding, which means Louisianans will pick up the tab for programs that were expanded or enacted in the growing budget.
Louisiana’s economic performance between 2011 and 2021 ranked dead last in the nation in the Rich States, Poor States analysis released by the American Legislative Council last week. The metrics used in the report, according to ALEC, are “highly influenced by state policy.”
The Pelican Institute argues that without reforms, higher taxes could be on the horizon to balance the budget.
The Pelican Institute’s Citizen’s Guide to the Louisiana Budget offers an overview and history of the state’s operating and capital budgets and explains how the state can create a more responsible, sustainable budget over time that remains adaptable to the needs of Louisiana.
The document illustrates how unsustainable growth over the last decade was driven by Medicaid expansion in 2016, and federal pandemic and natural disaster relief. It also goes beyond the dollars and cents to highlight sound budgetary practices for the future, including limiting spending, freeing up budgetary silos, and resisting pressure to raise taxes.
The Pelican Institute plans to follow up the guide with a new analysis from the institute’s chief economist, Vance Ginn, on why Louisiana needs reform and how legislators can learn from states like Texas and Florida, which have budgeted more responsibly over much of the last decade.
“With the state’s economy struggling and tens of thousands of Louisianans moving out of state, families and businesses are hungry for tax relief and an assurance that the state government will use tax dollars effectively. That begins with a responsible state budget,” Erspamer said. “The Pelican Institute’s Citizen’s Guide to the Louisiana Budget makes it easy for every citizen to understand how important a responsible state budget is to Louisiana’s Comeback Agenda.”
The Citizen’s Guide can be found here.