La. Officials Expect Budget Surplus, but Warn of $300M for Storm Cleanup

Blue Skies At The State Capital Building Baton Rouge Louisiana
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BATON ROUGE (The Center Square) — Louisiana Commissioner of Administration Jay Dardenne told the Louisiana Board of Regents on Tuesday he expects the state to end the 2021-22 fiscal year with a surplus, though he’s “a little concerned” about a looming $300 million federal payment.

Dardenne and the Louisiana Legislature’s Chief Economist Deborah Vivien shared their economic outlook with the board on Tuesday as regents prepare higher education’s budget request next month for the coming fiscal year.

“I can say with some confidence the state will have a surplus and one-time money available to spend next year and the budget will be strong,” Dardenne said, though he did not provide figures. “The governor’s priorities will continue to center around support for early childhood learning but also continued emphasis on higher education with an emphasis on the importance of what you do in terms of supporting the economy.

“It will be incumbent for our colleges and universities to sharpen their pencils in showing their value and how certifications and degrees translate into jobs,” he said.

The 2022-23 higher education budget included a $159.2 million boost, including $31.7 million for faculty pay, $5.4 million for dual enrollment and universal transferability, $29.25 million for healthcare workforce development, $10 million for broadband improvements and another $10 million in other spending.

Other appropriations included $15 million more in needs-based financial aid, $10.5 million for the M.J. Foster Scholars Program for adult learners and an increase of $137.4 million for campus upgrades.

The spending was made possible by unexpectedly high state revenues, a nearly $700 million surplus from the previous fiscal year and an influx of federal COVID relief funding.

“I think we’re going to have a pretty good situation as we go into our final budget year” of Gov. John Bel Edwards’ administration.

Dardenne, however, highlighted a $300 million federal payment for storm damage cleanup that may come due that officials were not yet planning to pay off.

“I’m a little concerned about that right now,” he said.

Dardenne also addressed an ongoing effort in the Legislature to study the possibility of eliminating the state’s income tax, questioning how lawmakers might replace the roughly $5 billion per year in revenue.

“We don’t think the Legislature ought to take any dramatic steps with regard to tax reform,” he said. “Where are you going to replace that huge amount of revenue that gins the state budget?”

Vivien largely echoed Dardenne’s budget outlook, though she warned about potential impacts from inflation and other economic uncertainties.

Regents also heard from the state’s four university system presidents, who shared concerns about retaining faculty and staff, the impact of the pandemic and hurricanes on student enrollment and budget strains from increased fuel prices, retirement and health care costs.

Regents will consider approval of the current higher education budget at a meeting today and will begin work on next year’s budget request next month, with a goal of submitting a proposal to the Division of Administration on Nov. 1.

“We are grateful that the governor and legislature have prioritized investments in talent development, faculty pay and increased affordability here in Louisiana,” said Higher Education Commissioner Kim Hunter Reed. “However, today’s budget hearings remind us that two good years of postsecondary education funding cannot erase decades of disinvestment. To remain competitive and advance talent development will require sustained strategic support to increase education and workforce development in our state.”

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