BATON ROUGE, La. (BRPROUD) – Louisiana State Treasurer John M. Schroder issued a statement on the Revenue Estimating Conference (REC) Forecast Monday afternoon.
Schroder said he expects three of the next four fiscal years to have a decrease in revenue according to REC, and that based on the State General Fund Five-Year Forecast, he believes deficits will be nearing $700 million by FY 26.
Such significant reductions, Schroder said, would impact higher education and healthcare, as these would be used to balance the budget.
For this reason, Schroder stated, “The Louisiana Legislature should be cautious about increasing recurring expenditures based on the additional revenue recognized by the Revenue Estimating Conference on May 9, 2022, as they undertake to finalize the Fiscal Year 22-23 state budget.”
In his news release, the State Treasurer went on to explain that despite the positive figures reflected in the updated forecast – which projects a $350 million increase in tax revenues for the year ending this June, accompanied by a $104 million increase in tax revenues beginning in July- caution in spending is advisable.
Schroder said, “The forecast adopted on 5/9/22 for FY 23 projects a $45M decrease from the current year’s forecast. Corporate income tax alone is projected to have a 23% decrease. FY 24’s forecast, also adopted on 5/9/22, projects a $206M decrease from the prior year’s revenues.
The projected revenue change from FY 23 – FY 26 (including the impact of .45 sales tax rolling off) is a $422.5M decrease. Any increase in the state budget based upon short-term revenue prosperity locks in future budgets at spending levels that cannot be met.
Excess funds should be used in a manner that will reduce future state budget pressures when revenue inevitably decreases. The .45 sales tax rolls off in FY 26. If we don’t plan for that now, we will have some deep cuts.”
Schroder’s statement is issued as Louisiana lawmakers analyze the state budget, with Republicans and Democrats addressing concerns related to the financial impact of the war in Ukraine as well as the Federal Reserve’s attempt to curb inflation.
The two sides have also been debating the allocation of state money to pay raises for teachers and state infrastructure.