Lessons from the 2023 Budget Spending Fiasco— This Year’s busted spending cap sets up a future fiscal cliff

The $51 billion bloated budget approved by the Louisiana Legislature in the final moments of the chaotic legislative session was wasteful, reckless, and irresponsible. This amount of spending does not come without consequences. Not only will it cost Louisiana families thousands of dollars and kill quality jobs, it also sets up future fiscal cliff that could lead to more taxes. We cannot afford to let that happen.

As Swampwatchreaders know from previous coverage, much of the debate dominating the 2023 session centered around whether or not a majority of lawmakers would vote to raise the state’s expenditure limit—a constitutionally-imposed cap that dictates how much of the state’s surplus lawmakers can spend in any given year. 

Given that the Louisiana budget has already skyrocketed over 80% since 2016, consistently growing faster than the state’s economy year-over-year, it defies common sense that this question was even being asked. Nevertheless, that’s how Swamp leaders decided to approach the fiscal session after they realized the state would receive about $2.2 billion in surplus revenues this year from over-taxing us.

Democratic Gov. John Bel Edwards, Senate President Paige Cortez, and some big spending lawmakers lead the campaign in favor of busting the expenditure cap to spend nearly every dime of the excess cash, arguing it was necessary to fund teacher pay raises, infrastructure projects, early childhood education and a myriad of other projects.

Meanwhile, fiscal conservatives, business groups, and Swampwatchers argued that the legislature should not raise the state’s expenditure limit. Rather, the state should use recurring revenue to pay for priorities like teacher pay raises and infrastructure projects. The excess funds should only be used for purposes authorized under the constitution, and those are 1.) to pay down existing state debt and 2.)  to fund the state’s Rainy Day savings account. By paying down debt and dedicating a portion of the excess funds to the Rainy Day, lawmakers could have put the state in good financial shape AND helped to trigger tax relief mechanisms that would have further flattened personal income brackets and allowed you to keep more of your own money. But they didn’t.

Two days before the end of the legislative session, the House voted 85-19 to bust the state’s spending cap by $1.65 billion over the next 13 months. Hours later, the Senate unanimously approved the same proposal. 

This budget-busting vote on the spending cap is notable because Republicans hold supermajorities in both chambers—and the record now shows the vast majority of them have the unusual dual distinction of having voted for the largest tax increase in Louisiana history back in 2016 and now the biggest government budget in state history—one that we will remember and be paying for for generations.

The Legislature’s profoundly shortsighted (read stupid) move to exceed the state’s expenditure limit is also deeply problematic because it sets up another “fiscal cliff” that the next governor and future lawmakers will have to address. 

This year’s state budget is infused with billions of dollars in one-time federal funding and revenues generated from a “temporary” 0.45% sales tax increase that the Legislature passed at the behest of Gov. John Bel Edwards at the beginning of his term. That temporary sales tax is set to expire in 2025 at a time with the state Revenue Estimating Conference is already forecasting a significant drop in state revenues generated from fees and licenses. Altogether, it’s estimated that state revenue will be about $1 billion less than it is today. 

Lawmakers had an opportunity to save the excess cash for the rainy day that we can already see coming. Instead, they decided to go on an unprecedented spending spree that could ultimately end up saddling hardworking Louisianians with more taxes and debt. The only way to prevent this from happening now is for voters to seek out and support candidates this Fall who will reduce government spending, not raise taxes again, to deal with it. 

Like all families, businesses, and states, Louisiana must learn to live within its means, and we have to elect leaders who understand how to do that. When it comes to making wise choices in the upcoming elections, voters should look beyond the rhetoric and party labels behind the candidates’ names—and ask tough questions about the budget and other issues they are passionate about to get a deep sense of who the candidates really are.  By demanding accountability and fiscal prudence from candidates and returning lawmakers now, citizens can help influence spending showdowns and budget battles in the future.

Note: This is the third article in a series highlighting the 2023 Louisiana Budget Spending Fiasco. To read more, go here.