Gov. John Bel Edwards prioritized massive bridge projects, water system fixes and teacher pay raises in his Louisiana budget proposal that incorporates $3.8 billion in additional, unexpected funding.
After years of lean spending plans and heartache-inducing tax hikes, Louisiana is finally flush with cash, thanks in part to pandemic and hurricane-related recovery dollars and spending.
The state ended its last budget cycle in June with a $699 million surplus. It’s expected to collect $1.6 billion more in tax and fee revenue in the current budget cycle.
Revenue projections for the next budget cycle, which starts July 1, are $869 million higher than the state spending plan from last year. Louisiana also has an additional $1.4 billion in federal COVID-19 relief funding to distribute.
Much of that money comes with restrictions, and some of it has already been spent. For example, the state has already siphoned off $400 million to pay down its debt to the federal government for improving the hurricane protection system in the New Orleans area after Hurricane Katrina.
State law also requires a quarter of any budget surplus go toward the state’s rainy day reserve for lean budget times and 10% to pay down state retirement system debt.
But there’s still plenty of money to go around and – even with limitations on it – the funding can be leveraged to accomplish things Louisiana has been trying to get done for years.
Senate President Page Cortez, R-Lafayette, said earlier this month he wants some of the excess funding to go toward already-approved state transportation projects that have grown more expensive recently because of inflation. Like Edwards, Cortez has also mentioned putting more money toward the state unemployment trust fund as well as water and sewerage projects.
But while they are flush with cash now, the governor and lawmakers also have to keep the state’s looming fiscal cliff in mind.
In 2023, the state will start redirecting money that now supports higher education, K-12 schools and health care services to pay for the state’s large transportation projects under a law legislators and the governor passed last year. The state’s sales tax will also automatically drop 0.45% in 2025, causing a drop in funding.
Still, Edwards is confident his current budget proposal is responsible, he said Tuesday.
“We do believe this is sustainable. Otherwise, we wouldn’t be proposing it,” the governor said.
Here’s a breakdown of where Edwards would like to see the additional money spent:
Unemployment Trust Fund replenishment – $550 million
The state’s unemployment trust fund was depleted at the start of the COVID-19 pandemic when an unprecedented number of people were out of work. Louisiana is still looking to get the trust fund back up to its pre-pandemic levels.
The governor said this $550 million will allow Louisiana to avoid a trigger that requires the state to increase taxes on employers if the trust fund falls below $750 million. Edwards would use federal COVID-19 funding for this trust fund bail out.
New Mississippi River bridge – $500 million
The governor wants to set up a special fund that would be used to support the construction of an additional bridge crossing over the Mississippi River in the Baton Rouge region. The money could be used for planning and design purposes as well as construction, but it would not cover the expense of the whole project.
Even if Louisiana started building a new Mississippi River bridge today, the project would cost between $800 million and $900 million, Transportation Secretary Shawn Wilson said. By the time the state breaks ground on that project, it’s likely it will be even more expensive.
Statewide water and sewerage system improvements – $500 million
The state has between 1,600 and 1,700 boil water advisories across the state each year. While $500 million might seem like a large sum, it’s not nearly enough to address the state’s challenges with providing clean drinking water. The backlog of maintenance needs in Louisiana’s water and sewerage systems is estimated to be $7 billion.
Edwards and the Legislature allocated $300 million to water and sewerage needs last year. Legislators are expected this week to approve over 80 projects to receive that funding.
Coastal restoration projects – $150 million
The governor said he would take this funding from last year’s budget surplus and apply it to the top-ranked projects in the state’s coastal restoration plan. Coastal Protection and Restoration Authority Chairman Chip Kline said he expects his agency’s proposed budget for the next fiscal cycle, which includes federal funding and money from the BP oil spill, to be $1.3 billion, the largest ever.
K-12 teacher and staff pay raises – $148.4 million
The governor is proposing pay raises for K-12 teachers and support staff for the second year in a row, though teachers would still be more than $3,000 short of the southern regional average.
Edwards wants an annual $1,500 raise for teachers and $750 raise for support staff. If the state revenue projections go up again in May, he wants lawmakers to increase teacher pay even more – by $2,000 annually. The additional $500 increase would cost the state $49 million.
Louisiana teachers have received two pay raises since Edwards has been in office: $800 last year and $1,000 in 2019. Edwards has put pay raises before the Legislature five times in the seven years he has been governor.
Lake Charles Interstate 10 bridge – $100 million
Dubbed by truckers one of “scariest” bridges in the country, the Interstate 10 bridge over the Calcasieu River in Lake Charles has no shoulder and is incredibly steep. It’s also very old. Wilson, the transportation secretary, said it was built before the interstate system even existed.
This money would be combined with federal funding to upgrade the bridge. The total project is expected to cost more than $800 million.
Early childhood education – $43 million
Business leaders and education advocates have been pushing for a greater investment in early childhood education for years. Approximately $17 million of this money would go toward a program that provides full-day prekindergarten to children from low-income families.
Higher education faculty pay raises – $31.7 million
Edwards’ proposal follows a higher education faculty pay raise last year that resulted in a 2% to 3% salary increase. Prior to 2021, Louisiana faculty had not received a raise in 13 years.
Louisiana Community and Technical College programs – $20 million
This funding includes broadband workforce training as Louisiana tries to expand high-speed internet service to more rural areas.
‘Special’ higher education institutions – $19.1 million
This money has been set aside for professional institutions such as LSU’s medical schools and the Southern University Law Center. Pennington Biomedical Center and LSU and Southern’s agricultural centers will also receive extra money.
Need-based college scholarships (GO Grants) – $15 million
This will expand the reach of GO Grants, Louisiana’s college scholarship program based on financial need. The state Board of Regents said the state has been unable to award GO grants to over half of the people who are eligible because of a lack of funding. This extra $15 million will go a long way toward making it possible to give out more money to needy college students.
University and college Title IX offices – $5 million
LSU’s sexual assault scandal exposed a deficiency in several university and college Title IX offices, which are tasked with investigating sexual misconduct on campus. This funding will help shore up the staff and resources on campus devoted to addressing gender discrimination and sexual misconduct.
TOPS – $0
For the first time ever in the history of the program, the state does not have to allocate more money to the TOPS program, which provides a generous scholarship to thousands of college-bound Louisiana residents every year. The program typically requires more than $300 million in public funding annually.
This year, however, there’s been a dip in Louisiana residents enrolling in college. As a result, the program doesn’t need the funding boost it typically requires. The Louisiana Board of Regents attributes the drop in college enrollment to the COVID-19 pandemic and the state’s back-to-back hurricanes in 2020 and 2021.
Wage increase for health aides – ??
Edwards has incorporated a pay raise for aid workers who help people with disabilities at home. These positions are typically funded through the state’s Medicaid program. The organizations that employ these workers have complained that the state’s Medicaid reimbursement rates are so low that they aren’t able to pay people enough to stay in those jobs.
Under the governor’s plan, many of these workers would go from making $13-per-hour and $14-per-hour to $18.50-per-hour.
It’s unclear how much money this will cost the state. The governor’s budget chief, Jay Dardenne, is expected to release more details about this and other aspects of the budget proposal Tuesday.