Friday, May 17, 2024

Louisiana Senate votes unanimously to increase state spending cap

by BIZ Magazine

By Julie O’Donoghue, Louisiana Illuminator

The Louisiana Senate voted unanimously Monday to raise the cap for state spending over the next 13 months by $2.3 billion — a crucial step toward allowing Gov. John Bel Edwards and state lawmakers to spend all of the $2.2 billion in unexpected revenue available to the state. 

Senate President Page Cortez, R-Lafayette, sponsored the resolution to increase the spending threshold by $500 million in the current budget year that ends June 30, and by $1.8 billion in the next fiscal year that starts July 1. 

The outcome of the vote was expected. Senate leadership has indicated for months the chamber would be comfortable increasing the spending limit.

The question is whether the Louisiana House has enough votes — a two-thirds majority of its members will be required — to raise the state’s spending threshold. Now that the Senate has voted, the House is expected to take up the spending cap matter over the next 10 days. Both chambers must approve the resolution for the state to be able to spend all the money available to them. 

Conservative House members have balked at raising the cap over the past several weeks, saying it’s irresponsible to support more government growth. Instead, they proposed putting hundreds of millions of dollars toward paying off public retirement debt or socking the money away in saving accounts for future use.

But even with that strategy in place, House members haven’t necessarily found a way to stay within the current spending restrictions. The House budget plan passed earlier this month leaned heavily on massive public retirement debt payments, but it still exceeded the existing cap by $200 million next fiscal year, according to the Edwards administration.

Senators have long favored breaking the cap, saying that Louisiana’s current largesse presents a once-in-a-lifetime opportunity to invest in infrastructure, higher education and coastal restoration projects that would cost more money in future years.


Cortez said a higher spending threshold will allow lawmakers to use the state’s unprecedented financial resources to address aging university buildings and other failing infrastructure. Louisiana has about $1.8 billion in construction needs on college campuses and $167 million in necessary work at its ports, according to his resolution.

If they do not raise the cap, legislators will also have to pull back on road, bridge and coastal restoration projects already in the works because they will no longer have access to cash to fund those initiatives.

“It will slow down projects that are currently in [the state construction plan], and you will be borrowing money in a 5 to 7% [interest rate] environment and paying off that interest over the next 30 to 40 years,” Cortez said. “You would never go and borrow a 30-year note to fix the hole in your roof if you had the cash in the bank.”

Cortez did signal he was willing to put restrictions on how the extra money will be used if the House agrees to raise the cap threshold. The Senate president said he would devote the money to “one-time” projects and expenses, as opposed to programs that need ongoing funding.

Lawmakers are also still considering using some of the extra revenue to pay down a considerable amount of public employee retirement debt, Cortez said. Lawmakers hope doing so would lower the state’s overall retirement expenses starting in 2025.

The Senate is expected to unveil its budget proposals Thursday and Friday. They will include two versions — one that could be used if the current spending limit stays in place and one that makes use of all of the extra money if that restriction is lifted.

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