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Louisiana Budget Leader Expects Second Year of Surplus

Commissioner of Administration Jay Dardenne feels confident that the state will, once again, have money remaining from the current fiscal year for use in the next one. But if the state is required to pay for storm damage cleanup costs, that number could change.

(TNS) — Louisiana's budget outlook is bright going into Gov. John Bel Edwards' final full year in office, Commissioner of Administration Jay Dardenne said Tuesday, Sept. 20.

"I am pretty confident we are going to have some money to do some things," Dardenne told the Louisiana Board of Regents at the start of a day of budget hearings.

Earlier this year, state aid for higher education rose by $159 million — the largest hike ever — and colleges and universities got another $313 million for capital improvements — a 77 percent hike over the previous year.

Better-than-expected state revenue and an influx of federal aid because of the coronavirus pandemic financed major hikes for a wide array of state services during the 2022 regular legislative session. Lawmakers also enjoyed a $699 million surplus from the previous financial year.

"I think I can say with some confidence we are going to have a surplus; we are going to have some money from the current year," Dardenne said, a reference to the financial year that ended June 30. "I think we are going to have a pretty good situation as we go into our final budget year."

One possible concern, he said, is whether the state will have to pay the federal government $300 million for previous storm damage cleanup costs. Dardenne said he was confident earlier that the state would not have to make the payment, but recent signals from the U.S. Army Corps of Engineers have raised red flags.

"I am a little concerned about that right now," he said.

Dardenne, former chair of the Senate Finance Committee, also noted that 2023 is both an election year and a fiscal session. The political calendar will include races for governor and legislative seats, and many lawmakers will be in their final session before term limits force them out of the Legislature.

"You are going to have a lot of posturing going on," he said. "We don't think the Legislature ought to take any dramatic steps with regard to tax reform."

The House Ways and Means Committee last week launched a seven-month study on the possibility of eliminating the state income tax. Rep. Richard Nelson, R- Mandeville, and other backers note that fast-growing states like Texas and Florida have no state income tax.

Dardenne said the discussion has to include how the state would replace the roughly $5 billion in annual revenue raised by the state income tax on individuals and corporations.

"Where are you going to replace that huge amount of revenue that gins the state budget?" Dardenne asked.

Texas and some other states without an income tax rely on high property taxes to fund state services. Louisiana has some of the lowest property tax rates in the nation.

The 2023 regular session begins April 10. Edwards, who is in his second term, leaves office in January 2024.

Dardenne noted that the financial outlook in recent months is in sharp contrast to Edwards' first term, which was marked by wholesale budgets cuts and a series of special sessions aimed at stabilizing Louisiana's $39 billion operating budget.

Edwards and his lieutenants have complained for seven years that reckless budget practices by former Gov. Bobby Jindal triggered years of financial headaches for state services after Edwards took office in 2016.

"We are not going to create a situation where the next governor and a new Legislature has to immediately fix a problem we created," Dardenne told the Board of Regents.

(c)2022 The Advocate, Baton Rouge, La. Distributed by Tribune Content Agency, LLC.
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