Louisiana’s latest tax revenue forecast, adopted Thursday, makes it clear that the pandemic-era effects on the state’s finances have now ended, and the state’s economy is reverting to a more traditional pattern of modest growth.
It should serve as a clarion call to state policymakers that Louisiana cannot afford costly new tax breaks, as the state will need all available revenue just to maintain its current commitments to teachers, students and others who rely on state programs and services.
The Revenue Estimating Conference added $166 million to the state’s forecast over the next 18 months – a modest uptick after several years of strong growth in tax collections that produced large budget surpluses. The new forecast will form the basis of Gov.-elect Jeff Landry’s budget recommendations, which are due to the Legislature in February.
Even with the improved forecast, the state general fund – which finances the ongoing operations of state government, K-12 education and other services – is projected to take in less revenue in the current year and the upcoming fiscal year than it did in the budget year that ended June 30.
Louisiana faces additional fiscal headwinds in 2025, when a temporary 0.45% state sales tax is due to expire.
The state has made significant new investments in education over the past several years – from early childhood programs to workforce training and higher education. But for these investments to pay off they must be maintained. That cannot happen if the next administration prioritizes tax breaks over investments in health care, education and the public safety net.
The responsible path forward is clear: The new governor and Legislature must ensure that we generate enough revenue to pay our teachers at the Southern average, ensure all children have access to high quality early care and education programs and that health care providers are paid fairly for the services they provide.
