Monday, May 20, 2024

Louisiana legislators discussing where to spend extra revenue

by BIZ. Staff

By James A. Smith, LSU Manship School News Service

BATON ROUGE — The group that projects the state’s revenue finally recognized a brighter outlook after months of partisan infighting.

The state’s Revenue Estimating Conference on Wednesday reached the unanimous vote needed to increase this year’s state general fund forecast by $110 million and next year’s forecast by $119 million.

Now that the forecast is approved, lawmakers are tasked with deciding what to do with the extra revenue. 

Gov. John Bel Edwards has proposed spending it on a pay raise for teachers and other state programs.  But before the new forecast was approved, legislators had begun debating cuts in some programs since they cannot pass a budget that is not balanced. 

The legislative session just started Monday. So approval of the new forecast now could make it easier for Democrats and Republicans to agree on a budget with less rancor than has been the case in recent years.

Since November, House Speaker Taylor Barras, R-New Iberia, had repeatedly rejected the recommendations of state economists to raise the revenue projections even though the three other members of the conference wanted to accept them.

Barras had said he feared there was too much uncertainty in the previous outlooks. But Democrats complained that his refusal to acknowledge the extra revenue was a politically motivated effort to limit state spending and Edwards’ chances for re-election this year.

The economists updated the forecasts again before Wednesday’s meeting and lowered their revenue projections by $20 million from the earlier forecasts that Barras had rejected. 

“I have been accused of ignoring the economists’ views, and I don’t want to do that unnecessarily,” Barras said during the meeting.

The economists believe the new forecast is safer, more conservative and more accurate.

The three other members of the Revenue Estimating Conference–Senate President John Alario, R-Westwego, Commissioner of Administration Jay Dardenne and LSU economist James Richardson– all had voted in favor of the earlier forecasts.

“This action by the REC proves what we have known since the middle of last year – that for the first time in a decade, Louisiana has an improving economy and budget surpluses,” Edwards said in a statement after the vote.

The approval of a more promising forecast means Edwards should be able to achieve his top priority of teacher pay raises, Dardenne said. The raises for both teachers and their support staff would cost about $100 million.

Edwards delivered a hopeful State of the State address on Monday and described Louisiana’s economy as better and “producing more than ever before.” Chief state economist Manfred Dix seemed to not entirely be in line with Edwards’ optimism.

“It’s not bad, but it seems to me that the Louisiana economy is not firing on all cylinders,” Dix said.

The revenue conference also recognized the $308 million surplus from last year, an achievement Edwards is campaigning on. The state faced a $2 billion deficit when Republican Gov. Bobby Jindal left office and Edwards’ term began.

“Overall, the state’s economic picture is positive, and a continuation of that positive growth is the most likely outlook for the forecast horizon, but the slow pace of growth is worrisome,” the Legislature’s chief economist, Greg Albrecht, wrote in his outlook.

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