Paying Down Debt Yields the Savings Promised
Pelican previously highlighted the state budget that busted through its own limits to spend billions in extra taxpayer dollars at the end of the 2023 Regular Legislative Session. When the dust settled, the legislature spent approximately $2.2 billion in extra revenue fiscal year 2023 (FY 23) and nearly $1 billion more than was originally expected in FY 24.
While there were some missed opportunities to save for the future and ensure thresholds were met to give some relief to taxpayers, there was at least one bright spot in the record-breaking budget.
The legislature chose to pay down approximately $500 million in debt to the state employee retirement system, rather than spend those funds on items that would need to continue to be funded in future years. The total owed on public employee retirement debt totals more than $19 billion. This one-time extra payment on the principle of the debt represents one of the largest one-time payments in quite some time. The debt is normally made in annual payments totaling nearly $1 billion and is paid by agencies as a percentage of an employee’s salary.
In a presentation of his first Continuation Budget to the legislature in January, Governor Landry’s chief budget officers showed significant annual savings from this payment. The Continuation Budget is an unofficial document that presents the current year’s budget and shows how much it will cost the state to continue funding the same programs, services, and activities throughout the next four years. It’s used to project potential surpluses or deficits. This document shows that the state will save $99 million each year over the next four years, thanks to the legislature’s choice to pay down retirement debt last year.
We applaud the legislature for this responsible use of excess tax revenue and encourage similar responsible actions every time excess funds are realized.
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