The Louisiana House of Representatives recently passed a responsible budget for Fiscal Year 2024-2025 after making mostly minor changes to a similarly responsible budget Governor Landry presented earlier this year. As it left the House, the state’s total budget is $47.9 billion dollars, which is $4.1 billion less than the budget for the current fiscal year.

Looking strictly at the state’s general fund, which consists primarily of the sales and income taxes individuals pay to the state, the budget for next year is $11.99 billion, or $230 million less than the current year, but $111 million more than was spent in fiscal year 2023, mainly due to fluctuations in revenue.

Nearly every agency will receive a reduction, except Veterans Affairs, Corrections, Public Safety, and Natural Resources. The Judicial and Legislative branches of government will also receive increases. The vast majority of the reductions are from federal funds, totaling $2.5 billion for FY 2025, because COVID-era spending is coming to an end.

The budget passed by the House continues to demonstrate responsible budgeting by allocating resources toward key budget areas. As COVID-era federal largesse continues to decrease and the state’s economy continues to struggle from poor policy decisions of the past, the excessive spending growth from prior years is coming to an end.

What are some of the important, new, or additional spending items added by the House?

  • $126.7 million for a teacher stipend.
  • $71 million added to the Minimum Foundation Program (K-12 education funding formula) for tutoring, differentiated compensation for in-demand teachers, and student internships and apprenticeships.
  • $24.3 million for a shortfall in the MFP projection.
  • $9 million for state trooper pay raises.
  • $7.3 million for additional drug and specialty courts to be operated throughout the state as alternatives to incarceration, and family services, and Court Appointed Special Advocates.
  • $3 million to fund programs that provide alternatives to abortion.

What were some of the items added by the Governor and maintained by the House?

  • $356.3 million additional funding for Medicaid-related services.
  • $122 million for acquisitions and major repairs throughout the state, primarily in the Department of Corrections and the Department of Transportation and Development.
  • $84 million for increased personnel costs throughout state agencies.
  • $62.8 million to provide the federal matching fund for the state highway program.
  • $17 million in additional funding for the Department of Children and Family Services for the LA 4 Early Childhood program and congregant care and group homes.
  • $11 million to establish Troop NOLA, a permanent state police troop in New Orleans.
  • $10 million in additional funding for the Department of Corrections for increased operating costs due to laws recently passed during the second special legislative session of 2024.

What is next for the budget?

The Senate has the budget now and can make any changes they feel are important to them. The Revenue Estimating Conference has not met since December, when the previous Administration and Legislature were in office. Should they decide to meet before the end of the regular legislative session on June 3, the Governor’s budget leaders and the Legislature will have the ability to set a new revenue forecast for the current fiscal year and next. With more up-to-date information, the forecast could increase, leaving the Senate with more state general fund revenues with which to work.

We caution the Legislature and the Governor against spending all available revenues this year and next. As the Pelican Institute and many others have noted previously, forecasters are predicting lower revenues in future years due to the upcoming expiration of the sales tax increases of 2016 and 2018. Prior administrations and legislatures have failed to properly plan for this expiration and continued to increase the state’s budget and spending exponentially, rather than taking the opportunity, as promised, to restructure spending.

The budget, as passed by the House, represents a great first step in responsible budgeting that will set our state toward a more stable fiscal future. We’re encouraged to see state leaders actively discussing and planning for potential budgetary shortfalls and look forward to working with them to find long-term solutions that will place and keep Louisiana on a path toward fiscal stability and responsibility to taxpayers.