American Rescue Plan Bringing Billions to Louisiana: How Should they Be Spent?

American Rescue Plan Bringing Billions to Louisiana: How Should they Be Spent?

Louisiana is set to receive $3.2 billion in federal relief dollars from the American Rescue Plan of 2021. This is a large amount of money and it is crucial that the state government use this money wisely and responsibly. In order to get the maximum effect from these dollars we recommend legislators abide by the following guidelines:

First and foremost, relief dollars should only be used on one-time expenses. If the money is misappropriated for recurring expenses, the state budget would be in disrepair in coming fiscal years. To avoid budget shortfalls and tax increases, the money must only be used on one-time expenditures.

Lawmakers should insist on total and immediate transparency in how these dollars are spent. Louisiana doesn’t have the best track record when it comes to reporting how the government is spending money. Good, clear communication and real-time reporting on Louisiana Checkbook would instill a great deal of trust from the public.

The legislature’s top priority should be an investment in infrastructure. There is great consensus about the need and urgency to address roads and bridges and this is a great opportunity to plow significant, unexpected dollars into that priority. Expected federal regulations yet to be released by the Treasury Department may restrict the use of these dollars in some way, so legislators should view roads, bridges, and water infrastructure – between current capital outlay and these federal dollars – as a whole, in order to get the biggest impact on immediate improvements in our physical infrastructure.  The money should go strictly to roads and bridges, not overhead. Additionally, DOTD should be required to report 100% of their expenditures on the checkbook.

In particular, the Department of Transportation and Development (DOTD) should double down on its Road Transfer Program, which works to devolve local roads currently maintained by the state. Louisiana has the 11th largest state-funded roadway network in the country, despite being the 18th smallest state in land size. This would be a great long-term value for one-time funds and bring local roads up to speed – and off the state’s long-term liabilities – quickly and effectively.

Also, DOTD would be wise to employ the “Dig Once” policy passed by the legislature last year in any infrastructure investments. This will help tremendously in lowering the barriers to broadband deployment across the state and shrink the digital divide. For more thoughts on broadband and federal stimulus dollars, see my colleague Eric Peterson’s work here.

Although infrastructure projects should be the top priority for these funds, it would be appropriate to re-fill at least some of the unemployment trust fund and pay back federal loans to this program. Prior to the pandemic, the trust fund was a great reform success story – well run, well managed, and well-funded. Now, it has taken a hit because of government policy, and it would be appropriate to use some of these funds to replenish what has been lost.

Effectively using this unexpected windfall of federal dollars is of utmost importance. Frankly, these are dollars coming out of the pockets of our kids and grandkids as the federal government borrows heavily and prints money in order to meet these spending levels. Louisiana lawmakers would be wise to think twice before passing them through the pork-barrel buffet or using these dollars on budget tricks or efforts to fund ongoing expenses for which we’ll have to send taxpayers the bill in future years.

 

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