(The Center Square) — Louisiana House and Senate leaders will negotiate over final budget details this week after fiscal conservatives signaled support on Monday for raising the state’s spending cap.
The House Appropriations Committee voted 21-3 on Monday to approve Senate Concurrent Resolution 3 after amending the proposal to increase the spending cap. The Senate request to increase the limit by $500 million for 2022-23 and $1.8 million in 2023-24 was cut to $250 million and $1.4 billion, respectively.
The approval followed a House budget sent to the Senate in early May that aimed to devote much of the state’s $2.2 billion in excess and surplus funds to pay down unfunded accrued pension liabilities, which Republicans argued would save $200 million in interest schools could use to increase pay. The House budget aligned with key principles for a responsible budget promoted by a coalition of Louisiana organizations that include the Pelican Institute, Louisiana Association of Business and Industry, the Louisiana Family Forum, and several others.
The coalition is calling on lawmakers to avoid exceeding the spending limit to fully fund the Rainy Day Fund and save toward revenue triggers to lower individual income and corporate taxes, which would spur growth and help stem the state’s outmigration.
Senate leaders and Gov. John Bel Edwards instead want to invest much of the additional funds in direct $2,000 raises for teachers, increased spending for higher education and early learning, transportation projects, university buildings, hospitals and other priorities.
A Senate budget approved on Monday includes additional funding for teacher raises, water and sewer projects, supplemental law enforcement pay, and programs aimed at reducing property insurance costs. Senate leaders warned that failing to raise the spending cap, which requires approval from two-thirds of lawmakers in both chambers, puts funding for coastal restoration, transportation, and local governments on the chopping block.
Also pending in the House is a request from the State Board of Secondary Education to increase the school funding formula by $282 million, which includes $197 million in raises for teachers and support staff, as well as stipends for educators in certain schools and leadership roles.
Senate President Page Cortez, R-Lafayette, acknowledged on Friday the state could fund teacher raises and supplemental pay for law enforcement, both recurring expenses, without busting the spending cap.
Testimony in the House Appropriations Committee on Monday revealed substantially more funds would be devoted to paying off pension debt if the cap is not increased.
Despite Monday’s vote to move SCR 3 to the House floor, fiscal conservatives in the lower chamber continue to advocate against the move as chamber leaders prepare for a conference committee to reach a compromise. Opponents to the spending cap increase have cited a 0.45% temporary tax that’s set to expire in two years, reducing annual revenues by about $440 million, as well as the legislature’s history of overspending.
Lawmakers have until Thursday to come to an agreement or face an extraordinary session to secure a budget before the fiscal year begins July 1. An extraordinary session would increase the threshold for budget approval to a three-quarters vote of lawmakers in both chambers, which would give fiscal conservatives more leverage in the process.
