Associated Press

Louisiana House leader: Surplus should refill rainy day fund

  • Melinda Deslatte, AP

By MELINDA DESLATTE, Associated Press

BATON ROUGE, La. (AP) — With the final calculations still to be done, diverging ideas already emerged Thursday for how to spend a $100 million-plus surplus expected to be left over when the books are closed on the state’s last financial year.

House Speaker Taylor Barras said he wants to use the money to refill Louisiana’s “rainy day” fund, which was used during the year to pay agency expenses. Senate President John Alario said he wants to “put the money on the side” and not rush to make any decisions on its use.

Gov. John Bel Edwards hasn’t offered ideas yet for how he’d like to spend the excess.

State economist Manfred Dix told Louisiana’s income forecasting panel Thursday that tax collections exceeded revenue projections by about $140 million in the 2016-17 financial year, which ended June 30.

Dix, who works for the Edwards administration, warned the estimate was preliminary and unaudited, and still needed to be compared against spending levels.

But after the accounting is completed, a surplus is expected.

Edwards and lawmakers, however, won’t be able to use the money to help close the more than $1 billion gap looming in mid-2018.

Under Louisiana’s constitution, surplus dollars can only be spent on certain one-time expenses, like debt payments, construction work and coastal projects, not ongoing agency expenses and continuing programs. At least 10 percent of any surplus is supposed to pay down retirement debt, and a quarter of a surplus is earmarked for the rainy day fund.

Barras, a New Iberia Republican, wants to use more than the required 25 percent for the rainy day account, saying his priority for the surplus was “absolutely” repaying $99 million that lawmakers took from the fund in a February special session to help close a deficit.

“We owe the rainy day fund some money,” he said.

The account currently contains about $287 million.

Use of the rainy day money was contentious in the special session, with House GOP leaders resistant to tapping into the savings account, but Edwards and Senate leaders warning that refusal to use the money would force damaging, unnecessary cuts on programs and services. Edwards had wanted to use even more from the rainy day fund.

Months later, it’s clear the income forecast had been too conservative and the deficit that was closed hadn’t been as large as projected. Dix said the state received more income from sales and personal income taxes than expected during the last budget year.

Alario, a Westwego Republican, said he didn’t yet have a specific set of ideas for where the surplus should be spent.

“I’m very happy to see we finally have a surplus and don’t have to worry about midyear budget cuts, but I also think we need to take a deep breath and put the money on the side and decide what’s the best use of it,” he said.

The legislative leaders and the Edwards administration have been tempered in their excitement about the surplus, as they stare down another massive budget hole. But officials say they hope the surplus is a sign that Louisiana’s economy is on the uptick.
“It shows that we are heading in the right direction,” Edwards said on his monthly radio show.

Louisiana’s unemployment rate of 5.2 percent is one of the highest in the country, but has continued to fall. The Legislature’s chief economist, Greg Albrecht, has said the state appears to have dug its way out of recession and started a slow recovery.
Follow Melinda Deslatte on Twitter at

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