Tax season just ended, and Louisianans likely noticed they kept more of their hard-earned income due to pro-growth fiscal reforms that took effect on January 1, 2025. Those reforms delivered income tax cuts to every Louisiana taxpayer and marked an important step toward making the state more competitive for workers, families, and businesses.
As the effects of those reforms continue to play out, Louisiana’s Revenue Estimating Conference (REC) projects that the Legislature may have fewer dollars to appropriate over the next two years. However, insiders have told us that gross revenue collections are up and recent large refunds recently claimed will stop later this month—both of which point to an overall positive revenue picture that will likely continue. This is revenue that goes into the state’s general fund (SGF), generated through taxes, licenses, and fees. It can be used flexibly and is the second largest component of the state budget after federal funds.
As always, a fiscally responsible budget will need to be passed this legislative session before it ends on June 1. But even with such warnings to exercise discipline in spending, the Legislature continues to appropriate huge sums of excess SGF dollars for pork projects, sending state tax dollars to various local governments and non-governmental organizations. Local entities that have grown accustomed to and dependent upon this political process have long lobbied lawmakers through this process, undermining local autonomy, responsibility, and accountability. This tradition also undermines “fiscal conservatism” and the ability of lawmakers to address statewide needs.
The news of the state possibly having less “extra” revenue to spend is no excuse to forego statewide needs; it’s a reminder to prioritize wisely.
One such priority is LA GATOR, the state’s new school choice and education freedom option to help students access a school or home-based education program that fits their individual needs. Currently, 17,387 eligible students and their families are waiting to see if their LA GATOR applications will be funded for the school year that starts in just three months. If funded, they’ll get to attend the school of their choice or have access to courses and instructional materials for a home-based education. If not, they may be forced to attend a public school that, as evidenced by their application to LA GATOR, doesn’t meet their needs.
Louisiana has the money—it’s simply a matter of priorities. The state can absolutely afford to maintain critical government services while simultaneously allowing state dollars to follow Louisiana’s children to the school or educational environment of their parents’ choice. For starters, look at the money already set aside for K-12 education. Local school systems funded through the state’s Minimum Foundation Program (MFP) formula have repeatedly returned excess appropriated money to the SGF. It’s projected that this year will be no different, with $42 million being returned. Those dollars could enable families to meet their child’s education needs through LA GATOR. And if lawmakers don’t want to leverage those dollars, there are hundreds of millions of dollars more that can be directed from other low-performing, low-priority programs and pet projects that have no business being funded by the state in the first place.
At the same time, numerous bills are moving through the Legislature that add significant state costs or dedicate state dollars for specific purposes, further shrinking the share of SGF dollars lawmakers can prioritize each year. For fiscal year 2025-2026, only 28% of the SGF was considered discretionary. The overwhelming majority of the state budget is locked into spending streams before legislators can even begin budgeting.
Louisiana does not suffer from a shortage of revenue. The question is whether it will continue to suffer from a lack of political will to position the state and its people for prosperity.
