Friday, June 21, 2024

Gov. Edwards projects $500 million surplus while GOP lawmakers say that’s a sign taxes are too high

by BIZ Magazine

By David Jacobs | The Center Square

The state of Louisiana finished the most recent fiscal year with a surplus of about $500 million, Gov. John Bel Edwards’ administration says. Republican lawmakers say it’s a sign taxes are too high.

Lawmakers will decide next year how to spend the money. According to the state constitution, the money can only be spent on one-time expenses, not ongoing operating costs. One quarter must be put in the “rainy day” fund. 

Commissioner of Administration Jay Dardenne on Friday told the Joint Legislative Committee on the Budget that the money allows state government to reduce retirement debt; chip away at delayed maintenance on state buildings, roads and bridges; and build up savings to prepare for a possible economic downturn.

“We finally have [fiscal] stability,” Dardenne said, contrasting the current situation with the $2 billion deficit the administration says it inherited.

A majority of U.S. states have seen budget surpluses in recent years due to the booming national economy and the immediate aftereffects of the federal Tax Cuts and Jobs Act.

Some legislators say the surpluses show that taxes are too high.

“It seems to me that we’re extracting more money out of the taxpayer’s pocket,” said state Rep. Lance Harris, an Alexandria Republican. “I think that’s probably why we have a surplus.”

Edwards last year fought to extend a 1-cent sales tax increase that was scheduled to sunset July 1, 2018. Lawmakers compromised and voted to extend 0.45 percent of the expiring penny. When local sales taxes are included, Louisiana has among the highest sales taxes in the country.

State Sen. Rick Ward, R-Port Allen, pointed to the estimated $15 billion backlog of needed upgrades on roads and bridges and $2 billion in deferred maintenance for state-owned buildings to say the state doesn’t have a windfall.

“We’ve got a lot of work to do,” Ward said.

The Edwards administration previously had said they expected a surplus of about $300 million. The final number won’t be official until next year.

The state ran surpluses of about $308 million last year and about $122 million the year before.

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