BATON ROUGE, La. (BRPROUD) — Louisiana’s top economists are forecasting the rebounding trend from the pandemic to continue. The Revenue Estimating Conference met at the Capitol Tuesday to help shape what the state’s budget could look like next year.
The Department of Administration and the Legislative Fiscal Office is projecting the state to continue to bounce back from the pandemic. The way tax revenue trends are going, Louisiana is forecasted to have over $847 million in excess funds for fiscal year 2022.
That excess money for FY 22 is going towards paying down some debts, like the federal levee debt from Hurricane Katrina. The surplus money from FY 21 has not been accepted by the Joint Legislative Committee of the Budget, which then returns to the REC to be accepted.
“Were that not already allotted we would have over a billion dollars in the current year that we would have to spend… it just shows how conservative our forecast was,” Commissioner of Administration Jay Dardenne said.
The economists at the Department of Administration and Legislative Fiscal Office both attribute part of the significant rebound to increased collection of income taxes since more people are back to work.
“General sales tax, income, corporate [taxes] remain significantly above trend and appear to be at what I would characterize as a potential crest,” said Ben Vincent, Chief Economist at the Legislative Fiscal Office.
There also has been a lot of federal relief aid that has bolstered the economy and allowed people to spend more than the year before.
“I think one of the things we may have underestimated here was the extent to which some of that federal support would help to not just hold income up from a potential fall off but actually perhaps more than compensate for the decrease we saw,” Economist Dr. Stephen Barnes said.
That crest mentioned is forecasted for fiscal year 2025 and on as the economy levels out from the pandemic aid and when some temporary taxes are sent to sunset and no replacements have been named yet.
Under the state constitution, excess funds can be used the same way other general fund dollars can. Surplus dollars can only be used for certain funds, such as the rainy day fund, and paying down debts.
With income, sales, and corporate taxes expected to continue on the upward trend, this allowed for the Fiscal Office to project over $770 million that could be put into the FY23 budget. This more conservative forecast was accepted by the conference, compared to a more optimistic outlook with even higher revenue collections by the DoA.
Members of the conference will be meeting with the governor over the next two weeks to come up with the official budget that will be debated in the 2022 legislative session that is set to begin in March. The executive budget must be released by Jan. 25.