Louisiana faces a $339 million budget shortfall for the 2025-26 fiscal year – which jumps to more than $500 million if the state (as it should) renews the one-time stipends paid to teachers and support workers. Lawmakers are considering several options for closing the gap, including diverting revenue from vehicle sales taxes away from infrastructure projects and back into the state general fund. The Times Picayune | Baton Rouge Advocate’s Meghan Friedmann reports: 

Jan Moller, executive director of Invest in Louisiana, a progressive policy group in Baton Rouge, said a big reason the state has historically lacked money for infrastructure improvements is because it hasn’t raised its gas tax since 1990. Redirecting motor vehicle sales tax revenue to the state general fund “would absolutely help fix the problem of the fiscal cliff, but that should be accompanied by a conversation about Louisiana’s gas tax, because we do have a problem of a huge infrastructure backlog,” Moller said.

Revenue Secretary Richard Nelson hopes to use the fiscal cliff as a justification for a broader overhaul of Louisiana’s tax structure. So far his plan – to cut income taxes for people and corporations and eliminate the corporate franchise tax, among other changes – would make the budget hole much deeper. 

Moller … said higher taxes, not spending cuts, are needed to fill budget gaps. “We are not raising enough revenue to support the needs of the state,” Moller said, naming the child welfare system, higher education and early childhood education as three areas that need attention.

Voucher inflation

A recent study from a Princeton University researcher showed how Iowa’s education savings account program is driving up tuition prices for private schools in the state. Something Like the Truth’s Robert Mann explains staggering increases in private school tuition in Oklahoma after state leaders implemented their own program. 

When Oklahoma launched the program last December, some private schools saw a lucrative profit opportunity. One example is Global Harvest  School in Ardmore. According to a media report, its tuition was $1,000 per semester in the fall of 2023. But what do you imagine happened when Oklahoma announced it would provide a tax credit of up to $3,750 per student for the spring 2024 semester? The school increased spring tuition to $3,500, a 250 percent increase.

Louisiana lawmakers created their own ESA program during the 2024 legislative session. But the program was watered down from its original version to prevent the spiraling costs that other states have experienced.


End of pandemic education funding presents challenges

The federal government provided unprecedented aid to states and local school districts to navigate the education challenges caused by the Covid-19 pandemic. But that aid is set to expire this fall, which has left states and districts scrambling to pay for programs they were funding with federal dollars. Pew’s Samuel Pittman reports on the challenge:

States may be able to work with districts to help them identify alternative sources of revenue to sustain spending on key initiatives. And federal agencies might be able to provide ongoing grant funding for some programs … Without an alternative funding source, districts may turn to their state budgets, which would pose a challenge as many states seek to curb spending, or to local voters to supplant federal dollars, an approach that is already seeing mixed results.

States prepare for ‘silver tsunami’

Nearly a quarter of the nation’s entire population will be 65 years or older by the middle of the century. A record 4.1 million people will turn 65 this year alone. This “silver tsunami” is creating anxiety for state leaders who worry about older adults’ housing, health care and general well being. Route Fifty’s Kaitlyn Levinson reports: 

“States are recognizing that something’s got to give,” [SCAN Foundation’s Narda] Ipakchi said. Policymakers in recent months have unveiled new plans to inform policies and programming aimed at meeting the needs of aging individuals with an emphasis on keeping them connected to their communities. … States are also turning their attention to older adults in the workforce, she said, as “a lot of older adults [report] jobs give them a sense of purpose and an ability to interact with people outside of the home.” 

Number of the Day

2.9% – Annual inflation rate for July, which dipped below 3% for the first time since March 2021. (Source: Bureau of Labor Statistics)