Last week the Louisiana House of Representatives passed House Bill (HB) 1 and HB 460—two bills that appropriate money from the state general fund, which is composed of various state tax revenues, and allocate excess funds. Excess funds are those that are remaining unspent in the current budget year either because they aren’t needed for their currently appropriated use or revenue forecasters are expecting additional tax dollars.

House Bill 1: Louisiana State Operating Budget

HB 1 includes Governor Jeff Landry’s fiscal year (FY) 26 budget proposal as amended by the House. Earlier this year, the Governor proposed a total state budget of $49.4 billion—a standstill budget reflecting minimal changes from the current year. The House unanimously approved a state operating budget that would match this amount with legislative, judicial, and auxiliary agency budgets included.

Significant items that remain in the budget are as follows:

  • $93.5 million for the new LA GATOR Scholarship program to help families connect their child with a school or homebased educational program that fits their child’s needs. The net cost will be lower due to corresponding savings to the Minimum Foundation Program, which funds public schools based on student enrollment.
  • $50.8 million to the Office of State Police to offset decreased self-generated fund collections.
  • $49.4 million to the Office of Behavioral Health for three new hospitals.
  • $33.6 million to the Department of Wildlife and Fisheries to replace the conservation fund with money from the state’s general fund.
  • $32.1 million to the Louisiana Department of Health (LDH) for the nursing home rebase.
  • $31.3 million for market rate adjustments for classified and unclassified employees.
  • $22.3 million to the LDH to increase physician reimbursement rates.
  • $12.7 million to the Jetson Center for Youth.
  • $5.9 million to the Department of Children and Family Services (DCFS) for frontline child welfare workers’ overtime compensation.

The House Appropriations Committee adopted amendments to the budget in order to continue the school employee stipends of $2,000 (certificated teachers) and $1,000 (school support workers) FY 26, which costs nearly $200 million. The following adjustments were made to accomplish this.

  • Acquisitions were reduced by $91.3 million by removing all new equipment and purchase requests (financed acquisitions were retained).
  • LDH funding was reduced by $26.3 million. LDH has an excess of $56 million this year that will be reduced in the supplemental bill.
  • Medicaid cost savings will come from new data-sharing between LDH and the Office of Motor Vehicles to identify recipients who no longer reside in Louisiana.
  • The public school high dosage tutoring program ($30 million), which gives school systems extra money when students fail to achieve proficiency in English language arts and math, was removed.
  • The Appropriations Committee is required to apply 25% of the FY 24 surplus funds to the unfunded accrued liability of the retirement systems. This year they will apply the entire 25% ($148.8 million) to the state police retirement system, instead of splitting the payment to all four state retirement systems. For FY 26, this will save an estimated $25.5 million in interest.
  • Personnel services were reduced by $20 million due to anticipated savings from a hiring freeze instituted by Governor Landry and reduced funding for unfilled positions.

The amendments also fund the following additional items:

  • $7 million to DCFS for domestic violence shelters.
  • $5.8 million to increase the per diem rate for local sheriffs’ jails that house individuals in state custody.
  • $2.9 million to LDH for 750 additional Community Choice Waivers.
  • $2.5 million to the Governor’s Office of Homeland Security & Emergency Preparedness (GOHSEP) for school safety initiatives.

With these amendments, the Appropriations Committee reduced over $100 million in recurring spending from the state’s general fund, preparing the state for future declining revenue, and the budget now stands at $344.8 million less in funding from the state’s general fund than the existing FY 25 operating budget.

HB 460: Supplemental Appropriations

While HB 1 responsibly funds critical state-level priorities, the Supplemental Appropriations bill, HB 460, tells a different story. This bill allocates nearly $60 million in excess money from the state’s general fund. Over $28 million was directed to local governments and agencies for infrastructure like sewer and water projects. More than $12 million was allocated to local governments for projects such as park maintenance, recreation programming, theaters, museums, and beautification. An additional $12 million was awarded to various non-profit organizations for operational or programmatic costs and church fairs. Read the complete list here on pages 26 through 53 (20-945 – State Aid to Local Government Entities).

Many of these appropriations effectively force Louisiana taxpayers to subsidize localized interests—commonly referred to as “pork barrel spending” —and also enable local governments and non-governmental organizations to compete for state funding as part of the political process. There is no transparent process for how funding decisions are made. While some of these projects may benefit specific communities, they often do so at the expense of broader taxpayer fairness—and sometimes, efficiency.

Spending Restraint and Tax Relief

The budget bills now await consideration by the Louisiana Senate. As they do, other budget related bills are advancing. HB 283 and HB 295 would constrain the growth of recurring state government spending, similar to how a provision in recent Constitutional Amendment #2 would have done if it had been passed. This is important because state spending has increased 84% over the past decade—twice the rate of inflation over the same time period—as the Governor and lawmakers have decried “fiscal cliffs.”

Several other bills that would lower state income taxes as the state limits recurring spending—effectively returning savings to taxpayers—are also moving through the process.

State Senators now have the opportunity to prioritize funding for critical priorities and provide much needed tax relief to Louisiana’s people. With continued efforts to strengthen fiscal responsibility and government efficiency, Louisiana can chart a path toward a more sustainable and prosperous future.