Issue Position: Budget & Fiscal Stability

Issue Position

The first thing that needs to be discussed when talking about Louisiana's budget is this: Louisiana does not have a revenue problem. Louisiana has a spending problem. Louisiana has too many dedicated funding streams and not enough discretionary spending, along with a history of poorly managed revenues and cash flows. While some protected funding streams have plenty of resources, others barely have enough. We need a more fluid and nimble ability to place resources where they are needed instead of relying on increased taxes to generate more revenue. Along with all the siloed money, Louisiana's budget making process is inefficient. Louisiana makes the budget each year by just adjusting and adding to last year's budget instead of completely reassessing Louisiana's needs and priorities yearly. In addition, Louisiana leaves no margin of error when making a budget. The state plans to spend every penny of expected revenue each year. This problem is only exacerbated because Louisiana makes a budget on expected revenue instead of expenditures, not putting the money towards what is needed but instead seeing how much money we think we will have and dividing it up from there. When the budget plan doesn't work out as expected (as it often doesn't), the state calls special sessions in order to come up with the extra money in order to not run a deficit.

With the myriad of problems with Louisiana's budget process, Louisiana ranks 49th in fiscal stability with the 2nd most unpredictable fiscal stability in the nation according to US News. Louisiana is also the state that is most dependent on federal dollars. The state must do a few things in order to better stabilize revenue and offer a more efficient budget making process making Louisiana 40th in fiscal stability in 4 years. The first of these solutions is to eliminate continuation budgeting which means that the state no longer just adjusts the budget from last year but instead reassess the budget from scratch each year, prioritizing what the state thinks is most important for that fiscal year. Next, Louisiana should engage in contingency budgeting, only planning to spend 97-98% of expected revenue so that the extra 2-3% could be used towards unexpected expenditures or applied to the "rainy day fund." This would decrease Louisiana's risk of running a deficit and having to call special sessions in order to come up with extra money. Louisiana needs comprehensive reform that allows for a budgeting process that focuses on expenditures instead of expected revenues. This would require a complete audit of our current system and accounts along with a call for a constitutional convention to free up dedicated funding streams. Currently we have a system that incentivizes high rates of spending with little savings. Instead, we need to incentivize and reward departments and agencies that save part of their budget per year. Although not the only possible ones, these solutions would put Louisiana back on track towards a better budget-making process.

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