‘Keep spending cap intact,’ says Treasurer Schroder
Published 9:30 am Thursday, May 4, 2023
BATON ROUGE, LA – Today State Treasurer John M. Schroder announced support for keeping the state’s spending cap intact and using some of the $1.8 billion in available funds for savings and to pay down debt, which will in turn free up funds that can meet various needs in future state budgets.
“Paying down our debt is the responsible decision,” Schroder stated. “Once you do that it frees up money that can be used for things like infrastructure, for early childhood education, for teacher pay raises, and for supplemental pay for federal matching grants. Or, you can deposit money for coastal restoration or a new Mississippi River bridge in Baton Rouge if that’s the will of the Legislature. There’s no need to ‘bust the cap.’”
According to the most recent Moody’s U.S. State Liabilities Report, Louisiana is burdened with $35 billion of debt.
Schroder added that debt reduction would bode well for future state bond ratings and that improved bond ratings translate into millions of dollars in savings year after year.
“It’s tempting to satisfy immediate needs and wants, but long term, paying off the debt on the front end allows you to tackle those things down the line, too,” said Schroder.
Spending plans are currently under consideration by the Legislature. There has been much debate over whether it will be necessary to bust the spending cap in order to expend the dollars available.
Paying down the unfunded accrued liability (UAL) debt that represents the state’s pensions for teachers and government employees will not count against the spending cap. Neither will placing money in the state’s Rainy Day Fund.
“Right now we’re swimming in federal money. However, it’s not ‘if’ we’ll suffer from deficits again, but rather ‘when.’ And the forecasts are saying that might be as soon as a year or two from now,” said Schroder. “If we do not want to repeat history with drastic budget cuts, it makes sense to put some money away for a rainy day.”