Setting the Tone: Fiscal Restraint in Louisiana’s FY 2027 Executive Budget

The new year is well underway, which means a new budget for the upcoming fiscal year must be proposed for Louisiana. Governor Jeff Landry’s executive budget for fiscal year (FY) 2027 (July 1, 2026-June 30, 2027) was unveiled at the latest Joint Legislative Committee on the Budget (JLCB) meeting. As the first step in the state budgeting process, the executive budget sets the tone for state funding priorities. This proposed budget commendably aims for fiscal restraint to promote government stability and affordability for Louisianans, especially as state revenue is estimated to decrease in FY 2028 due to the rededication of the motor vehicle sales tax to the Transportation Trust Fund beginning in 2028.

The total FY 2027 executive budget is $46.9 billion, which is just under $2 billion more than last year’s executive budget but approximately $3 billion less than the existing operating budget as of December 1, 2025. This year, expenditures increased primarily due to inflation, particularly within the Department of Corrections for both an overall increase in incarcerated individuals as well as their medical costs, and state Medicaid adjustments. Commissioner of Administration Taylor Barras noted that $300 million in the state’s general fund savings achieved by the Louisiana Department of Government Efficiency (LA DOGE), also referred to as Governor Landry’s Fiscal Responsibility Program, were incorporated into the proposed FY 2027 budget. The state’s general fund is comprised of tax, license, and fee revenue paid by Louisianans and serves as the primary funding source for state operations. LA DOGE also achieved significant savings in federal dollars by removing ineligible individuals from Medicaid and SNAP programs, achieving process efficiencies and workforce optimization, eliminating unnecessary contracts, and more, contributing to nearly $1 billion in total state savings.

IMAGE SOURCE: Office of Governor Jeff Landry

An additional $86.5 million was pulled from the state’s general fund as a substitute means of finance for departments requiring additional funding. The two largest allocations were for the State Police, which required an additional $42.5 due to statewide cost increases within the department, and the Louisiana Department of Health (LDH), which needed an additional $42.3 million to assume a greater share of SNAP administrative costs following a reduction in federal funding. Overall, LDH and Corrections saw the largest increases in state general fund dollars between the existing budget and FY 2027 executive budget, largely due to these means-of-finance substitutions, in addition to other major items outlined below.

The LA GATOR program was among the major funding priorities highlighted in the executive budget, which is slated to receive $44.2 million in additional funding on top of its current $43.5 million allocation in order to accept new families into the program—many of whom are currently waitlisted. This represents an encouraging step toward expanded school choice and flexible, customized educational options for Louisiana families. LA GATOR is an education savings account (ESA) program that allows families to utilize their public education dollars for learning options beyond public school, including private school tuition, home-based learning materials, individual courses, tutoring, and career training. Students who choose LA GATOR instead of enrolling in a public school also trigger a savings to the state’s Minimum Foundation Program formula, which funds public schools based on the cost of student enrollment. 

Last year, the Governor proposed $93.5 million for the program, but this amount was heavily reduced by the state Senate during the 2025 Louisiana Legislative Session despite overwhelming demand—leaving about 30,000 students on a waiting list. For the sake of these families, and many more who could benefit, it is essential that the Legislature fulfills the requested funding level.

Other major items funded in the executive budget include:

• $75 million for the High Impact Jobs Program within Louisiana Economic Development (LED).
• $12.1 million to invest in the Child Welfare Modernization System within the Department of Children and Family Services (DCFS).
• $17.5 million to Louisiana State Penitentiary to accommodate an additional 688 state offenders.
• $17.3 million for Local Housing of State Adult Offenders to increase the per diem (per day) rate for sheriffs for housing state inmates in local jails by $3 ($26.39 to $29.39 per state offender.
• $14.5 million to the Board of Regents to provide additional funding for the M.J. Foster Scholarship program.
• $30.5 million to LDH for Medicaid Managed Care Organization (MCO) adjustment.
• $8.3 million to LDH for nursing home inflation.
• $4 million to the Board of Regents to upgrade the Student Tuition Assistance and Revenue Trust (START) system.

In the upcoming 2026 Regular Legislative Session, Louisiana lawmakers will have a surplus of $577 million from FY 2025 and an excess of $292.6 million from FY 26 to spend. A surplus refers to remaining funds in the state general fund from the completed prior year, whereas excess funds become available when the Revenue Estimating Conference raises the current year’s forecast. 25% of the surplus must go to the Rainy Day Fund and 25% must be used to pay the state retirement systems’ unfunded accrued liability. The Governor recommended allocating the remaining surplus funds to the Coastal Protection and Restoration Authority, the Department of Transportation, and capital outlay projects. If an excess becomes available for the upcoming fiscal year, the Governor recommends first covering agency shortfalls and then funding critical infrastructure.

Governor Landry’s administration has demonstrated a continued commitment to fiscal responsibility by identifying opportunities to improve government efficiency and rein in state spending, helping ensure that the size of government remains within what Louisianans can reasonably support through taxation. After a surge of spending over the past decade, state budgets guided by this philosophy will create opportunities to reduce and even eliminate taxes. We are encouraged that Governor Landry and legislative leadership have recently shared plans to further reduce the state’s individual income tax, possibly bringing it down from 3% to 2.5%, and then possibly even setting a formal path to get to zero. Lawmakers now have the opportunity to review and adjust the budget before the 2026 Regular Legislative Session concludes on June 1.