(The Center Square) — The Louisiana Legislature is expected to enjoy another budget surplus in 2025, which would be the eighth year in a row.
A budget surplus is when state revenues exceed state expenditures within a budget year. The 2024 fiscal year is projected to end with a projected $595 million surplus.
With a looming budget gap coming in July, 2025 when a 0.45% state sales tax and other tax changes in the state expire, if only lawmakers could use this surplus to cover it.
However, state law sets limits on what lawmakers can use surpluses for. The Public Affairs Research Council laid out the options that are available.
There are six possible uses: The budget stabilization fund, retirement debt payments, highway construction, capital outlay projects, the coastal protection & restoration fund and bond debt payments.
The Louisiana constitution requires at least 25% of any surplus go to the budget stabilization fund, commonly known as the state’s “rainy day” fund.
Starting this fiscal year, another 25% of any surplus money must pay down retirement debt. Voters passed a 2023 amendment raising the required percentage from 10%.
That leaves half of the $595 million up to the lawmakers discretion.
In 2023, over half of the surplus went to capital outlay projects. These can involve road and bridge work, building maintenance or any other construction initiatives. After that, and the other previously noted constitutional requirements, 13.3% of last year’s surplus went to highway construction.
That left no surplus dollars for coastal restoration and protection work or bond debt payments. The previous two years, coastal restoration was much more involved, so that could fill up more of the surplus dollars in 2025.
However, as previously stated, there will be less dollars to use because of the new retirement debt requirements.
