The Revenue Stabilization Trust Fund: A Savings Account or a Spending Account?

If history has taught us anything, it’s that the economy is cyclical. Periods of growth are often followed by slowdowns, making responsible government budgeting essential to maintaining fiscal stability.

To prepare for those inevitable fluctuations, states maintain reserve funds to help weather periods of fiscal uncertainty. These reserves provide a financial cushion when revenues fall short of expectations, the economy slows, or unexpected events such as natural disasters create new budget pressures. By relying on savings during temporary disruptions, states can maintain essential government services without scrambling to raise revenue. Because strong reserves are a key indicator of sound fiscal management, bond rating agencies closely monitor both their size and use.

Louisiana has two primary savings funds to rely on: the Budget Stabilization Fund, or “rainy day fund,” and the Revenue Stabilization Trust Fund. Money from the rainy day fund may only be withdrawn when the state faces a projected budget deficit, while the Legislature can access the Revenue Stabilization Trust Fund by modifying its constitutional restrictions with a two-thirds vote of each chamber. Together, these two funds contain enough reserves to cover approximately 122 days of state operating expenses.

The Revenue Stabilization Trust Fund was established to help manage the volatility of Louisiana’s corporate and mineral revenue streams. Each year, corporate tax collections exceeding $600 million, along with 70% of undedicated mineral revenues between $660 million and $950 million, are automatically deposited into the fund instead of being spent through the regular budgeting process. Although the fund is intended to serve as a reserve, lawmakers have repeatedly exercised their authority to access it. The 2026 Regular Legislative Session was no exception.

During the 2026 session, lawmakers authorized the transfer of approximately $850 million from the Revenue Stabilization Trust Fund into 16 statutorily dedicated funds, some of which—most notably the Strategic Investments Across Louisiana Fund—were newly created to receive and distribute this money. The largest share of the $850 million was directed to transportation infrastructure via the Louisiana Transportation Infrastructure Fund. However, through just three other statutory dedication funds, $122.6 million flowed to the State Aid to Local Government Entities agency budget, which has historically been used to finance favored nonprofit organizations and low-impact local projects through a behind-the-scenes process. 

Source: Legislative Fiscal Office

The chart above illustrates how three statutorily dedicated funds that received Revenue Stabilization Trust Fund transfers ultimately directed $122.6 million to the State Aid to Local Government Entities budget unit.

Reserve funds are intended to prepare for economic downturns and unforeseen emergencies, yet a portion of Louisiana’s savings was redirected to initiatives that fall well outside the traditional purpose of a reserve fund. While some transfers from the Revenue Stabilization Trust Fund may support legitimate one-time investments, directing reserve dollars toward local earmarks raises important questions about whether the fund is being used as it should.

This November, Louisiana voters will decide whether to repeal the Revenue Stabilization Trust Fund and consolidate its balance into the Budget Stabilization Fund. The proposed state constitutional amendment would eliminate the Revenue Stabilization Trust Fund, transfer its existing balance into the rainy day fund, and increase the maximum size of the rainy day fund from 4% to 7.5% of state receipts.

Louisiana’s reserve funds should strengthen the state’s long-term fiscal stability—not become another source of funding for pork barrel spending. One-time revenues should remain dedicated to one-time priorities, ensuring that the state’s savings are available when Louisiana truly needs them.