(The Center Square) – Louisiana lawmakers are expected to have about $1.6 billion more in revenue to spend in upcoming budget cycles than previously projected, according to predictions from economists at a Revenue Estimating Conference.
Ben Vincent, chief economist at the Legislative Fiscal Office, told the conference revenues in 2021 came in 8% higher than a prior projection of $12.3 billion, resulting in $970 million in excess. For the general fund, revenues were $565 million above the previous projection of $9.9 billion, or about 5.5% above.
“The largest contributors are sales, personal income, and corporate tax,” Vincent said at Tuesday’s meeting. “Roughly $300 million in personal income, $258 (million) in general sales (tax) alone. Combined corporate income and franchise – $255 million. And motor vehicle sales tax adding on another $36 million.”
Vincent pointed to a loss of about 15% of total nonfarm jobs, or roughly 285,000, during the pandemic that since has recovered to about 6% below pre-pandemic levels.
“Like a lot of tourism and or oil dependent states, we’re just doomed to suffer a little more for a little longer,” he said.
The situation means the state is expected to collect about $1.2 billion more for the general fund than projected for the current budget cycle and about $770 million extra for the budget cycle that begins July 1.
About $275 million is expected to be set aside for dedicated uses, while another $400 million will go to pay off a federal loan used to rebuild the New Orleans’ levee system from damages from Hurricane Katrina, leaving lawmakers with $1.6 billion for the current and next budget cycles.
“It just shows how conservative our forecast was previously when we last met, and how well the economy is performing in these key areas,” Commissioner of Administration Jay Dardenne said.
Those funds are in addition to $1.4 billion the state received in federal pandemic relief, as well as about a $500 million expected budget surplus from last year.
Senate President Page Cortez, R-Lafayette, who took over as chair of the four-member Revenue Estimating Conference on Tuesday, said he expects the Legislature to use some of the excess funding for road and bridge projects, as inflation and the increased cost of materials have driven up the cost of approved projects.
Cortez also pointed to a backlog of maintenance and infrastructure projects at state universities and colleges.
The Revenue Estimating Conference – comprised of Cortez, Dardenne, House Speaker Clay Schexnayder and economist Stephen Barnes – ultimately adopted Vincent’s forecast, the more conservative of two presented Tuesday, for a variety of reasons.
Officials expect economic activity to plateau as federal pandemic assistance tapers off, and the state is expecting a decrease in revenue in 2025 as the state’s sales tax is scheduled to revert from 4.45% to 4%, Cortez said.
Members of the conference are expected to meet with Gov. John Bel Edwards’ administration in the coming weeks to help draft a proposed budget for consideration during the 2022 legislative session.
The executive budget is due Jan. 25. The 2022 regular legislative session begins March 14.