Louisiana budget cap deal draws fire from governor and fiscal conservatives



(The Center Square) — Louisiana lawmakers significantly increased the state’s spending cap to approve a total of $51 billion in spending for the fiscal year that starts July 1, a plan that’s drawing criticism from both the governor and fiscal conservatives.

The Legislature devolved into chaos on Thursday as lawmakers voted to approve the budget plan in the House following compromises between proposed House and Senate budgets devised by a six-member conference committee. The chaos included objections from conservatives who criticized the rushed vote during the last half-hour of the session.

The final tallies of 95-9 in the House and 35-3 in the Senate followed lawmakers’ approval earlier in the week to increase the spending cap enshrined in the state constitution by $250 million for the current budget year and $1.4 billion next year to spend about $2.2 billion in excess and surplus funds on one-time expenses.

Fiscal conservatives and a coalition of Louisiana organizations repeatedly urged lawmakers to constrain spending below the expenditure limit and invest instead in paying down unfunded pension liabilities, with some citing the looming expiration of a 0.45% sales tax that’s expected to reduce revenues by about $400 million in mid-2025.

Those efforts lost out to pressure from Gov. John Bel Edwards and the Senate to invest the additional revenue in teacher raises, transportation projects, coastal protection and other items.

“Unfortunately this session, Louisiana’s Legislature continued on a well-worn path of budgetary status quo, foregoing an opportunity to fully embrace the principles of fiscal responsibility that are needed to propel our state toward a more prosperous future,” according to the Pelican Institute.

“By pushing Louisiana’s spending higher still — above the budget cap — the legislature was not able to deliver Louisianans the tax reform they desperately need and deserve, and they were not able to supply the Rainy Day fund with the reserves necessary to stabilize our state.”

The final deal produces a $44 billion operating budget, and $51 billion in total spending, that includes $450 million in road and bridge work, $182 million for the Rainy Day Fund, $147 million for coastal protection, $50 million for water and sewer upgrades, $30 million for a roof fortification program, and $10 million in property insurers incentives to increase competition and lower costs for homeowners.

The spending includes hundreds of millions in payments toward the state’s unfunded pension liabilities, though far less than the roughly $950 million in the House budget. The legislative compromise also resulted in a $100 million cut to the Louisiana Department of Health that could impact federal matching dollars, which was criticized by Edwards.

“To do that — in a time when our fiscal situation is better than it ever has been, when we have more money in the bank than we have ever and when our fiscal forecast is so strong — in just ridiculous,” said Edwards, who vowed to “use every means at my disposal to minimize or completely eliminate the funding reduction.”

Much of the budget debate centered on education spending, and lawmakers ultimately agreed to $198 million in temporary pay hikes for teachers and support staff, $25 million in raises for teachers in high-need areas, $37 million for college faculty and staff pay raises, $15 million in need-based college grants, and $44 million for early childhood education.

Edwards had proposed spending $60 million on early childhood education to offset the loss of $192 million in federal pandemic aid used for early child care and education. The lower amount will likely mean significant cuts to a program that served more than 16,000 children.

Other approved spending included at least $137 million in legislative earmarks for local projects.

The final budget was sent to Edwards, who can approve or veto the legislation, or veto specific line items. Any rejection could prompt a veto override session next month. Republicans hold supermajorities in both chambers necessary to override any objections from Edwards.

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