Louisiana House Passes Supplemental Funding for the Current Fiscal Year

Note: This is the second in a series of posts regarding the package of appropriations bills as they move through the Legislature.

In addition to passing the budget to run state government for Fiscal Year 2025 (FY 2025), the House had the opportunity to spend funds remaining after the close of FY 2023, called surplus, and to budget unused funds remaining in the current year (FY 2024) budget, called excess.

Fiscal Year 2023 Surplus

FY 2023 ended with $325 million remaining in surplus money in the state’s general fund. Per the Louisiana Constitution, these funds can only be spent on six specific items. $81.2 million, or 25%, of the funds must go the Budget Stabilization Fund, and $32.5 million, or 10%, must go to pay down state employee retirement debt. The remainder can be spent on road construction, capital outlay, deferred maintenance, or paying down state debt. The distribution of the funds by the House closely resembles the plan released by the Governor when he presented his budget in February. $43 million will be spent on state road construction, and $168 million will be spent on capital outlay.

Fiscal Year 2024 Excess

There is $398 million available to spend in the remainder of FY 2024 from several sources.

The House placed $141 million of the available dollars into special funds for use at a later date. Much of that was appropriated for expenditure in House Bill 1 (the state budget bill) in FY 2025. Examples include:

• $84 million in the Transportation Trust Fund for state road and bridge repair.
• $10 million in the Voting Technology Fund for the purchase of new voting equipment, bringing the total available for that purpose to approximately $60 million.
• $10 million in the Louisiana Economic Development Fund.
• $8 million in the Riverboat Gaming Enforcement Fund, which helps fund State Police enforcement activities.
• $7 million in the LA State Parks Improvement and Repair Dedicated Fund Account.

The House spent approximately $250 million in the Supplemental Funding Bill, including:

• $47 million for the Department of Corrections.
• $46 million for funding to local governments and non-governmental organizations for various projects.
• $41 million to the Governor’s Office of Homeland Security and Emergency Preparedness to repay the federal government the state’s share of disaster recovery expenses for various disasters dating back to Hurricane Gustav.
• $28 million for special projects at various state colleges and universities.
• $7.5 million in increased funding to the State Police Crime Lab and various regional crime labs.
• $7 million to the Department of Children and Family Services for the Louisiana Coalition Against Domestic Violence.
• $3.6 million for the state match for administrative costs related to the Summer Electronic Benefits Transfer (EBT) food assistance program.

This is the first stop in the process for these two bills, as they move to the Senate next for any changes. Additionally, the Revenue Estimating Conference met on May 9^th and increased the revenue forecast for the remainder of the current fiscal year.  The economists estimated that $197 million additional state general fund will be available for expenditure this year, on top of the $398 million already available. However, like the previous year, this amount will exceed the state’s expenditure limit. There is an opportunity to spend $86 million of these new funds, the remaining $111 million must go into a savings account for later use or to pay down the state’s debt. The Senate will have the opportunity to spend these new funds, then the bills will go back to the House for reconciliation.

It’s important to note that neither of these bills contain much in the way of debt defeasance, other than the 10% of surplus funds that are required to go toward state retirement debt. Last year, amid the flurry of billions in extra funding the legislature wisely chose to pay approximately $500 million towards this debt, which costs the state more than $1 billion per year. As previously noted, this payment realized nearly $100 million in annual savings to the state’s operating budget.

We continue to encourage fiscal responsibility by paying down debt or saving for a rainy day with any additional funds that are recognized by the revenue estimators. Paying down debt frees up scarce resources for priorities and placing more funds in savings means more fiscal stability in the long term. Both actions also enable meaningful tax reform to leave more money in the hands of Louisiana’s hardworking people to enable them to flourish and to contribute to our state’s long-term economic growth.