State expects $330M surplus

Louisiana’s projected general fund balance is about $27 million for fiscal year 2022-23, with a preliminary projected surplus of $330 million, officials told lawmakers on last week.

Ternisa Hutchinson, state budget director for the Office of Planning and Budget, presented the state’s fiscal status to members of the Joint Legislative Committee on the Budget, highlighting for the first time Louisiana’s projected surplus for the last fiscal year.

“The revised statute requires by Oct. 15 to present the preliminary surplus deficit calculation,” she said. “What happens is all of the revenue that comes in are compared to all of the transfers or draws from the General Fund, and it is determined that a preliminary surplus of $330 million from fiscal
year 2022-23.”

“What happens now is that the accountants with the legislative auditors will continue going over the (Comprehensive Annual Financial Report) and then at the January meeting it is certified by the commissioner,” Hutchinson said. “Typically there’s not many changes.”

Hutchinson noted that by 2032, the state could need additional funds to pay off a Hurricane Storm Damage Risk Reduction System, though Louisiana has already paid $800 million.

“(The Louisiana Coastal Protection and Restoration Authority) and the state is working with the (U.S. Army Corps of Engineers) to evaluate projects, so it’s very well possible that we receive credits,” she said. “We wanted to make sure that the legislature is aware that there still is an outstanding amount, but it’s not due until 2032.”

Committee Chairman Rep. Jerome Zeringue, R-Houma, noted that the advanced payments of over $800 million resulted in a reduction through negotiation of the state’s obligation for the system from $3 billion to about $1 billion or less.

“We could get below $1 billion as opposed to $3 billion, which is a substantial savings to the state,” he said.

With the five-year forecast, committee members pointed to projected negative fund balances in fiscal year 2025-26 and 2026-27, which budget officials said are driven primarily by the scheduled sunset of a temporary 45 cent sales tax and rededicating a vehicle sales tax from the General Fund to a construction sub-fund.

“Those two factors … really are the ones that make those numbers negative,” said Jay Dardenne, commissioner of administration. “Otherwise, … we’ve been on a steady increase with surpluses really every year from 2017 forward.”

Sen. Heather Cloud, R-Turkey Creek, pointed out that much of that funding came from the federal government.

“We’ve made good decisions, but we’ve also been the beneficiary of federal dollars,” she said, adding that the roughly $4.5 billion shortfall will require the next governor and Legislature to consider “some hard decisions.”

Others highlighted that various tax changes made during the last legislative session will not be incorporated into the long-term forecast until the Revenue Estimating Conference meets again in December.

Zeringue noted that when accounting for required dedications to the state’s Revenue Stabilization Fund, the actual surplus for the last fiscal year is roughly $1.5 billion.

“We actually have two savings accounts for the state — revenue stabilization which is now close to $2 billion and we have a rainy day fund that is right below $1 billion,” he said. “So we’re on sound footing. … We need to address the shortfalls, but we’re in much better financial shape to address those going forward.”