Louisiana has a rare bit of good budget news: Gov. John Bel Edwards’ chief financial officer said Wednesday that the state ended the last budget year with a surplus topping $100 million.
Commissioner of Administration Jay Dardenne outlined the better-than-expected finish to the 2016-17 budget year, saying Louisiana collected more money than projected from sales taxes and personal income taxes in the year that wrapped up June 30.
Louisiana has $100M surplus, but won’t ease next budget gap
“The books have been closed on the revenue side for Fiscal Year 2017, and we’re not going to have a deficit. The economists will be reporting that we have a surplus well in excess of $100 million, which is obviously good news,” Dardenne told The Associated Press in an interview.
He said the state’s economists will provide further details on the tax collections to Louisiana’s income forecasting panel Thursday.
The treasurer’s office confirmed that the figure was “in excess of $100 million.” On his monthly radio show, Edwards said the surplus could be as high as $143 million, depending on how agency expenses are tallied.
While the news is a bright spot for a state struggling through years of repeated financial shortfalls, Dardenne said the surplus won’t help with the $1 billion gap looming in mid-2018, when temporary sales taxes passed by lawmakers last year expire.
Surplus dollars, under Louisiana’s constitution, can only be spent on certain one-time expenses, like debt payments, construction work, coastal projects and replenishment of the “rainy day” fund. They can’t be used to pay for agency operations or ongoing programs.
“It does not affect in any way the reality of the cliff that we’ll face for next year, but it does signal that we’re heading in the right direction,” Dardenne said. “It’s very good news. But we have to temper the good news with the reality for the cliff.”
Edwards and lawmakers are haggling over whether to renew the expiring taxes, rework other taxes or make cuts in the next financial year to close the $1 billion gap.
The announcement that Louisiana ended the last budget year with a surplus is one of the first financial bright spots for the Edwards administration since it took office in January 2016, inheriting a dismal budget picture riddled with shortfalls, short-term patches and uncertainty.
Louisiana has grappled with 15 midyear budget gaps in nine years.
Of the surplus, Edwards said: “That’s the first time we’ve used that word in a long time to describe our current fiscal situation, and that’s certainly a very positive development.”
Edwards and lawmakers closed two midyear shortfalls topping $300 million each in the 2016-17 year, not anticipating that year would wrap up with a surplus. They made cuts, reshuffled dollars and tapped into the rainy day fund, eliminating one of the shortfalls in a special legislative session called by Edwards and held last February.
The Edwards administration believes the improved tax collections that created the surplus show that Louisiana’s economy is on an upswing after being hammered by the downslide in the oil and gas industry.
“We’ve been expecting and hoping that things were trending in the right direction,” Dardenne said.
Louisiana’s unemployment rate of 5.2 percent is one of the highest in the country, but has continued to fall. The Legislature’s chief economist, Greg Albrecht, has said the state appears to have dug its way out of recession and started a slow recovery.