BATON ROUGE, La. (BRPROUD) – Is the governor’s plan for how to spend the state’s money in his last executive budget the best plan? Agencies are weighing in on how they think the money should be spent.
Gov. John Bel Edwards is proposing teacher pay raises, supplemental pay for first responders, and increases for spending on Medicaid among many other investments. With a $45 billion operating budget and over a billion dollars in extra revenue, the governor wants to end his term with historic investments.
But economists are projecting an economic slowdown as inflation continues to be an issue and the growth coming out of the pandemic is expected to lessen. With the roll-off of the .45 cent sales tax in the middle of 2025 and part of the vehicle tax being taken out of the state general fund to be put towards construction projects, the Public Affairs Research Council said the legislature needs to be wary of growing the budget.
“It is because of what we did with the temporary sales tax. And also we did the motor vehicle sales tax. So, we have somewhere between a $450-$750 million cliff, depending on how you count it. If you take that out of the equation, this is a pretty good budget,” PAR President Steven Procopio said.
Some legislators have already raised concerns about the teacher pay raises and other investments that would become permanent payments due to the new administration only having one year to prepare for any potential holes in the budget. Some Republicans, such as House party leader Rep. Blake Miguez, have spoken out against growing the budget on top of the revenue stream losses down the road.
“We do have some time to deal with it and the sooner we deal with it. I say even just setting aside $50 million and you still can spend it, just don’t put it in the recurring operating budget,” Procopio said. “You can put it in capital outlay or pay down debts. A lot of the things you can do with it that won’t make the problem worse.”
While the budget does make major investments into higher education and early education, the embattled Office of Juvenile Justice is facing a $2 million cut. There is also no money being allocated to the Fortify Roof Program that allows homeowners to apply for grants to build stronger roofs to withstand storms. It was a program frequently discussed in the special insurance session earlier this year.
This will also be the first year without COVID-19 federal aid money so schools, Medicaid and other programs will face significantly reduced funds that they have enjoyed the last two years.
“Are we going to end up okay? Is this going to create a hole in the budget? And that’s the thing we’re keeping an eye on. And I’m not saying things are wrong, but it’s something that everyone needs to pay attention to,” Procopio said.
Groups like the Louisiana Association of Business and Industry are stressing the use of one-time dollars on one-time expenses so the budget doesn’t grow too much this year.
“The governor’s proposed budget is simply the opening salvo to what will be a critical and multi-faceted debate on the budget this year,” said LABI President and CEO Stephen Waguespack. “The end result must be a targeted, responsible budget that is efficient and effective. Efficient in ensuring one-time dollars are used for critical priorities like infrastructure, community fortification and debt reduction rather than reoccurring expenses that will only make the 2025 budget cycle even more challenging than we already know it will be. Effective in investing in core priorities like workforce development, public safety, education and reforms that result in a more competitive tax structure. We look forward to kicking off this important process when the legislative session begins in a few weeks.”
The Louisiana Budget Project said the state can only invest in what they are willing to increase revenue for.
“Earlier actions by the Legislature have left the state facing an $800 million revenue shortfall in 2025. The last thing lawmakers should be doing is making this problem worse by passing new tax breaks. Instead, the Legislature should pick a responsible path by acting now to replace the revenue that is being lost, so the state can continue making the kind of investments that will move Louisiana’s economy forward,” said the Louisiana Budget Project in a statement.
This budget will be picked apart and debated in the regular session coming up on April 10. Read the governor’s budget here. Click here to read PAR’s commentary on the budget.