Thus began the state’s annual budgeting process: officials from the Division of Administration presented Governor Jeff Landry’s executive budget to the Joint Legislative Committee on the Budget (JLCB) on February 20, referring to it as a “standstill” budget. The budget for Fiscal Year 2025-2026 (which runs from July 1, 2025, through June 30, 2026) is $44.9 billion—$430 million (0.95%) less than the current year’s budget. In the budgeting process, Governor Landry’s administration sought to keep state spending from rising while partnering with legislative partners on a new government streamlining initiative.

The Governor’s team took the following steps to accomplish this:

  • Removed one-time items to restore baseline funding.
  • Removed items identified by cabinet members as inefficient, per executive order 24-11 of January 2024.
  • Made adjustments to account for increased utilization as well as state and federal mandates. Utilization refers to a variety of factors, ranging from government facilities to events like the Super Bowl earlier this year and Mardi Gras.
  • Attempted to fund non-recurring expenses where possible.

Means of Finance

The State’s General Fund, which is comprised of tax, license, and fee revenue that Louisianans pay to the state, decreased from Fiscal Year 2024-2025 by just under $343 million. This was attributed to the removal of carryforwards and a lack of growth in the Revenue Estimating Conference projections. Statutory Dedications also saw a significant decrease due to the removal of one-time funding. The Governor has promised to rein in state spending and continue finding ways to cut taxes, which these numbers seem to reflect.

While total state funds in the budget proposal decreased compared to last year, federal funds increased by over $626 million dollars (2.83%). About $460 million of this increase is attributed to efficiencies within the RESTORE disaster recovery program.

Some Important Increases Recommended in the Budget

The Governor’s budget proposal fulfills a promise to Louisiana families by including an additional $50 million (on top of the state’s existing school choice program) to the LA GATOR Scholarship Program. LA GATOR, set to begin later this year, will play a pivotal role in education freedom by allowing families to access funds to support enrollment in a school or educational program that best fits the needs of their children. Applications for the program will be accepted March 1 through April 15 at lagator.la.gov.

$12.7 million is requested for the Office of Juvenile Justice toward costs for additional beds and other medical expenses at the Jetson Center for Youth. Administration officials explained that the Jetson Center for Youth facility is in need of updating. An additional $4.1 million is asked to address overtime costs, particularly with staffing.

$11.1 million is requested for Louisiana Economic Development to strengthen the agency by financing items such as operational support, IT equipment and support, enhanced marketing efforts, and regional support for economic development groups across the state.

Among other increases, the Department of Health would receive $32.1 million for nursing homes that provide care for Medicaid patients and $22.3 million to reimburse private companies that administer Medicaid services. These two provisions are legally mandated.

Constitutional Amendment 2

Governor Landry’s team acknowledged some uncertainty surrounding proposed Constitutional Amendment 2, which is subject to voter approval on March 29th, and the potential impact it would have on the budget. If passed, lawmakers would have more funds available for utilization that were previously locked up in dedicated accounts and trust funds. These potential funds were not accounted for in the proposed executive budget, but lawmakers would be able to add them later.

Specifically referenced during the JLCB meeting was how the passage of Amendment 2 would raise the cap on the Budget Stabilization Fund, also known as they Rainy Day Fund, from 4% to 7.5% of the total state revenue receipts for the previous fiscal year. The Rainy Day Fund functions like a savings account that can be used for critical priorities such as predicted budget deficits. In addition to the Amendment, a companion bill would transfer money from the Revenue Stabilization Trust Fund to the Rainy Day Fund—reaching its new cap. The Revenue Stabilization Fund would eventually be dissolved.

Surplus and Excess

A surplus refers to remaining funds in the State General Fund from the completed prior year, whereas excess funds become available when the Revenue Estimating Conference raises the current year’s forecast. The surplus for Fiscal Year 2023-2024 is $595 million, and the current fiscal year has an excess of $29.4 million, which will be available during the upcoming legislative session.

25% of the surplus must go to the Rainy Day Fund and 25% must be used to pay the state retirement systems’ unfunded accrued liability. Governor Landry recommends allocating the remaining surplus funds to capital outlay projects, the Coastal Protection and Restoration Fund, and the Department of Transportation and Development. His administration will work with lawmakers on the specifics of this allocation.

Should excess funds become available for the upcoming fiscal year, the Administration recommends that it be used toward agency shortfalls first, and then toward critical infrastructure projects and funds.

What Comes Next?

The Governor’s executive budget is the first—and an important—step in the state’s budgeting process. His Administration has demonstrated its continued commitment to fiscal responsibility by looking for ways to improve government efficiency and restrain state spending, both of which aid in keeping the size of government from growing beyond that which Louisianans can afford to support in taxes. Lawmakers will now have an opportunity to make adjustments before the Regular Legislative Session ends in early June.

The Governor and legislative leaders have also signaled their support of proposed Constitutional Amendment 2, which would increase the Rainy Day Fund as a safeguard against future fiscal cliffs and provide lawmakers with more financial flexibility by eliminating a number of dedicated funds. With these potential changes on the horizon coupled with efficiencies found through the Fiscal Responsibility Program, financial stability and more responsible stewardship of taxpayer dollars appear to be more attainable.

More information regarding Louisiana’s budget and what can be done to ensure fiscal responsibility can be found in the Pelican Institute’s Citizens’ Guide to the FY 25 Louisiana Budget.