Thanks to an abundance of money ricocheting throughout the U.S. economy in light of trillions of dollars in deficit spending in Washington, state government in Louisiana finds itself flush with cash courtesy of robust tax collections and the like including a steady flow of “recovery” money from the Congress.
It’s so much cash that revenue projectors in Baton Rouge expect the state to close out the current fiscal year on June 30 with a more than $900-million budget surplus while a surplus in revenues of more than $600 million is expected next fiscal year, which begins July 1. Not since the heady days post-Katrina has state government in Louisiana had so much extra money on its hands, but we know how that worked out. Lawmakers went on a spending spree, cut taxes and kept spending. Budget shortfalls eventually surfaced and lawmakers — at the behest of Gov. John Bel Edwards — raised taxes. The COVID-19 craze later emerged and the Congress turned on the spigot, pouring money into the U.S. economy under the grand illusion that COVID would crash the global economy. State government in Louisiana, like the 49 other states in the nation, got fat from the madness.
In the spring when state lawmakers convene a fiscal-only session of the Legislature, expect lawmakers to trip over themselves to spend surplus revenues as quickly as possible sans any thought or concern that they will be setting the state up for financial calamity down the road. Thankfully, the state Constitution requires lawmakers to plow a certain percentage of surplus revenues into the state’s unfunded accrued liability fund and the state’s Rainy Day fund. Still, lawmakers will have in the neighborhood of $1 billion to spend this spring on whatever comes to mind, or whatever piques the electorate’s interest in an election year.
Not that they will listen, lawmakers would be wise to appropriate surplus revenues solely on the state’s infrastructure needs such as roads and bridges, and any monies earmarked for higher education should be aimed at the state’s technical and community colleges. Louisiana has a shortage of skilled workers. Turning out skilled workers is what technical and community colleges do best.
By all means, lawmakers should resist the urge to spend surplus revenues on recurring expenses. Once the surplus revenues are gone, recurring expenses remain. How, then, would lawmakers plan to pay them? Another tax increase?
We would like to believe lawmakers learned a lesson or two from the fallout of the financial insanity that ensued following Hurricane Katrina, but we aren’t holding our breath.
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