State rainy-day funds have been propped up over the past few years by federal dollars and a supercharged post-pandemic economy that generated a surge of tax revenue. But the number of days that states could cover operations using only rainy-day funds fell in fiscal year 2025, which marked the first decline since the Great Recession. Pew’s Justin Theal and Page Forrest explain how states should handle budget reserves as the federal government enters an era of fiscal retreat:
Increased uncertainty around the availability of federal funding—including aid in the event of a recession and perennial support for health care, transportation, education, and other key public services—adds another layer of risk for state budgets. … Further, elevated recession risk means states may also need reserves for their traditional purpose of helping to close shortfalls during economic downturns. To navigate these competing demands, states should use fiscal management tools, especially long-term budget assessments and stress tests, to ensure that their savings levels are adequate, and they should regularly update these analyses to adapt to the rapidly evolving fiscal landscape.
Louisiana could run for 31.3 days using only rainy-day funds, below the 50-state median of 46.9 days.
How $100,000 visa fee could affect Louisiana
The Trump administration plans to charge companies $100,000 for each skilled foreign worker they hire through an H-1B visa. As The Times-Picayune | Baton Rouge Advocate’s Alyse Pfeil reports, a policy that’s aimed at encouraging tech companies to hire more American workers is causing mass confusion in Louisiana, where universities and hospitals also rely on the visas to staff classrooms and doctors’ offices:
Some organizations are exempt from that (85,000 annual) cap and have no limits on the number of H-1B visas they can sponsor or when they can apply for those visas. Among them are universities and nonprofits affiliated with universities, including health care systems. This year, at least 92 applications have been approved for Ochsner, 82 for Tulane and 62 for LSU, according to federal data last updated in June. Approved applications included both new visas and extensions for existing ones. LSU Health Shreveport and LSU Health New Orleans also use the program. They’ve gotten 45 and 19 applications approved this year, respectively.
Infrastructure backlogs will hit state budgets as federal aid declines
States across the country have an estimated $1 trillion in deferred maintenance for public infrastructure. That’s according to new analysis from the Volker Alliance. Stateline’s Kevin Hardy explains how states are facing this expensive backlog at the same time the federal government is pulling back spending:
“The cliff is here,” said William Glasgall, one of the researchers and a public finance adviser at the Volcker Alliance. “The bridges aren’t getting any newer, the water treatment plants aren’t getting any newer.” … “The political reality is that this administration and this Congress are telling the states, you’ve got to live much more by your own wits,” he said.
Researchers found that 20 states do not mention deferred maintenance in their capital budgets. In Louisiana, lawmakers have been chipping away at the state’s $19 billion backlog of transportation projects by raiding a new rainy-day trust fund that was created with surplus corporate tax collections. But that money is likely to run out in a few years, as the Legislature last year approved massive tax cuts for big corporations.
New corporate tax cuts already increasing deficit
Federal revenue from corporate income taxes came in $77 billion lower than last year, according to a new report from the Congressional Budget Office. Matthew Gardner of the Institute on Taxation and Economic Policy explains how the massive corporate tax cuts included in the federal megabill are already increasing the federal deficit:
CBO attributes this drop to the effect of the new tax law’s absurdly generous bonus depreciation measure, which allows companies to immediately write off the cost of capital investments and likely prompted many companies to make smaller estimated tax payments in the most recent quarter. We can’t get a full breakdown of which companies are the biggest beneficiaries of the Trump administration’s latest largesse: most with substantial tax cuts from the new law will disclose these cuts (if at all) when they publish their annual financial reports for 2025, which generally will happen in February or March 2026.
Number of the Day
$307 – Increase in health insurance costs per month for a Louisiana family of four with two adults in their 40s earning $100,000 who purchase coverage through the federal marketplace. Enhanced premium tax credits that made health insurance affordable will expire at the end of this year unless Congress renews them. (Source: KFF)