Joint Budget Sept. 13, 2019

Members of the Joint Legislative Committee on the Budget discuss a larger-than-expected $500 million surplus with Commissioner of Administration Jay Dardenne, on Friday, Sept. 13, 2019. 

Louisiana likely will have a $500 million budget surplus for the most recent fiscal year, significantly more than the $300 million initially thought, Gov. John Bel Edwards’ administration said Friday, setting off a new round of debate in the governor’s race over the state’s financial situation.

Commissioner of Administration Jay Dardenne told lawmakers in a joint budget hearing that the larger surplus will allow the state to pay for “dramatic needs” in infrastructure, including a $14 billion backlog in road and bridge projects, and the Edwards administration cast the news as proof the state has emerged from years of uncertainty with a stable budget.

Some Republican lawmakers, as well as one of Edwards’ GOP opponents in the governor’s race that is less than a month away, criticized the news as evidence Louisiana is overtaxing its people. The news reignited an ongoing debate in the governor’s race about a tax deal Edwards reached with the GOP-led Legislature to shore up the budget.

Edwards, a Democrat running for reelection in a deeply Republican state, has made the state’s budget stability a key part of his platform. In a statement, the governor pointed to a $2 billion budget shortfall he inherited from former Gov. Bobby Jindal’s administration, and said the state’s financial picture has improved under his watch.

“Louisiana is experiencing budget stability for the first time in a long time, its highest ever personal income, a record high GDP and an improving economy,” Edwards said.

The health of Louisiana’s economy has also become a point of contention in the governor’s race, with Edwards’ campaign and his opponents citing different economic statistics to paint sharply diverging pictures.

Are jobs up or down in Louisiana? Gov. John Bel Edwards and Republicans cite competing numbers

Dardenne said the surplus grew because personal income and corporate taxes came in higher than originally expected, and also because federal tax changes boosted state revenues.

Once finalized, the surplus will automatically send $125 million to replenish the state’s rainy day fund, bringing it to the highest level since 2012, Dardenne said. Another $50 million will go to pay down debt accrued by the state’s pension systems. The figure could change before being finalized in the coming months.

The rest of the money will be spent by lawmakers on several other areas allowed by law, including coastal projects, transportation, capital outlay and bond payments.

Some Republican lawmakers on the joint budget committee applauded the news, while others argued the surplus is proof Louisiana’s taxes are too high. And some also rejected the Edwards administration’s assertion the economy is performing well.

Gov. John Bel Edwards says Louisiana will have another $300 million surplus

State Sen. Sharon Hewitt, R-Slidell, noted this is the third straight year Louisiana has had a budget surplus, after taking in $122 million more than expected in 2017 and an extra $308 million last year. She said she’s concerned about the growing figure each year.

“We do need to think about the taxpayers and we do need to think about whether we need to continue this because this is a lot of money,” Hewitt said.

David Weinman, a spokesman for Congressman Ralph Abraham, one of two main challengers to Edwards in the Oct. 12 primary election, said Edwards “said he would have to kick the elderly out of state nursing homes and cancel LSU football if he didn’t get his massive tax hikes,” referring to a worst-case scenario presented by the Edwards administration amid a budget shortfall of more than $850 million in 2016.

“He overtaxed Louisiana by half a billion dollars and now he’s bragging about a surplus,” Weinman said. “This money should be in your pocket, not his.”

Edwards struck a deal with the GOP-led Legislature in 2018 to shore up the state’s budget in part by raising the sales tax by 0.45%, which economist Jim Richardson says costs the average person about $49 per year. That came after several acrimonious special sessions as the Legislature and governor tried to deal with repeated budget shortfalls. 

State Rep. Lance Harris, head of the House GOP caucus, tried earlier this year to roll back that sales tax hike, an effort that was killed in the state Senate.

"This is the third year in a row, when we had heard how decimated the state budget was, that we ended up with a surplus," said Harris.

Dardenne cautioned against having a “knee-jerk reaction” against growing surpluses. Estimates by the Revenue Estimating Conference often result in surpluses or budget deficits, and Edwards has argued that surpluses are far better than having to make mid-year budget cuts. Dardenne also said the sales tax hike was not what contributed to the largest budget surplus.

Email Sam Karlin at skarlin@theadvocate.com