Louisiana Should Follow the Sustainable Budget Revolution
Spending, not taxes, is the ultimate burden of government.
If you don’t spend money on a program, you don’t need to collect taxes to fund it. And if you don’t spend money on programs, the government can’t regulate things. Remember that government spending is paid for by the people, as the government creates nothing to earn income, so considering what people can afford is crucial.
This is why it’s essential for governments at every level to narrow their scope to the essential functions enshrined in constitutions. Otherwise, spending grows too much and results in taxes being too burdensome on people. Governments across the country and the globe are spending too much.
And it appears that a sustainable budget revolution is happening!
I’ve been working for over a decade to help state, federal, and local governments create and adopt sustainable budgets that fund limited government. This is critical to keeping taxes and regulations lower than otherwise, so families and entrepreneurs have more of their hard-earned money in their pockets.
This standard is called a fiscal rule or a tax and expenditure limit (TEL), which goes like this: a government’s budget growth cannot exceed the rate of population growth plus inflation. How does this simple rule work?
This approach started in 2013 when I helped develop the Conservative Texas Budget. After years of excessive spending in Texas, we defined the narrative of a tangible cap on appropriations based on the rate of population growth plus inflation. There was no change in the state’s law right away, but this approach worked well for several sessions by helping keep spending within this rate, which represents the average taxpayer’s ability to pay for spending.
Importantly, this is a maximum growth limit, as most states need to spend much less than this limit as they are already spending too much, which will help leave more money in people’s pockets.
Over the years, this rule has been used to help state and local governments make their budgets more sustainable. One such victory came in 2021 when Texas put Senate Bill 1336 into law. The bill changed the state’s budget limit to not exceed the rate of population growth and inflation when it had been based on personal income growth.
This was an extraordinary reform that took nearly a decade to accomplish. It’s not perfect, as it should be in the state’s constitution and should cover all state funds and use population growth plus inflation. But it’s one of, if not the, best in the country.
The other spending limit that has long been the gold standard is the Taxpayer’s Bill of Rights (TABOR) in Colorado, which I recently outlined how it needed to be improved as it has been weakened over time.
By working with think tanks, grassroots organizations, and lawmakers across the country, I’ve helped create and pass sustainable budgets for the following states: Alaska, Florida, Iowa, Michigan, Mississippi, Montana, South Carolina, and Tennessee. I’ve also worked with other states where a sustainable budget was proposed, such as Kansas and Louisiana, but hasn’t yet passed.
Partnering with Americans for Tax Reform, I’ve contributed to creating the Sustainable Budget Project, which monitors state government spending and evaluates the adoption of sustainable budgets across all states. This Project has a slightly different methodology and purpose than the one outlined above, as the focus is on spending at the end of a budget period instead of the one I’ve been using for appropriations at the start of the appropriations process.
Together, these approaches can help states define the narrative about the need for spending restraint on the budget process’s front and back end. Given the excessive spending by governments and the incentive to continue doing so, there should be as many safeguards as possible.
As Louisiana enters a new year with a new session and new governor this year, lawmakers have an extraordinary opportunity to prioritize sustainable budgeting by adopting what we’re calling a Responsible Louisiana Budget.
The Pelican Institute released the first iteration of the RLB last year and the second one this year. This isn’t just about fiscal responsibility; it’s an effort that will help the people of Louisiana prosper. It will do so by helping Louisianans not be overburdened by unnecessary taxes for more money in their pockets.
It’s Geaux Time in Louisiana, and that includes sustainable budgeting!
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