We’ve been doing some research on the budget bills in the fiscal session they’ve got going on at the Louisiana legislature at present, in hopes that we’d finally begin to see a bending-down of the cost curve of a state government which is a failure in all the ways that matter.
Two years ago the Louisiana Freedom Caucus PAC commissioned a survey of the public in this state. Another one might well be coming soon. But in that original survey, the question was asked whether state government was a good steward of our tax dollars, and specifically it was asked whether taxpayers were getting value out of that money.
By a 68-24 margin, the answer was no.
And nothing has changed that would make that answer any different.
It’s said that the current budget being debated by the Louisiana legislature is $400 million smaller than last year’s budget. That’s nice. But $400 million out of a $50 billion budget is nowhere near enough to restructure Louisiana’s fisc – not in a way that allows for a tax code which generates real, organic, bottom-up economic growth wherein there are startups and small businesses bubbling up in all of our cities to fill up storefronts and soak up all of the labor supply pumping out of our colleges such that the brain drain of our educated citizens reverses.
That takes courage we don’t apparently yet have.
Here’s a closer look at the good, bad and ugly of this year’s Louisiana budget.
HB 1, The Main Budget Bill
As noted above, this budget trims overall spending by about $400 million, and that’s good. It’s better than the alternative.
And what we like is that even a lot of the state departments showing a topline bump in spending owe that increase almost entirely to federal infusions—roughly $600 million in federal funds that Louisiana did not get last year. That’s a good thing, on the surface, because it means Louisiana isn’t directly taxing our own citizens to grow government. And if those departments spend that $600 million on non-recurring things, then it can be said that at least the state is holding the line on its own self-generated spending.
But dependence on federal funds can be a poison pill.
If federal dollars dry up, it’s a real concern based on demonstrated history that democrats and RINOs will scramble to back-fill those funds with state cash. We’ve all seen these people wet their pants at the presence of a “fiscal cliff,” and it’s never recognized that a “fiscal cliff” is only a problem when you’re trying to spend money you don’t have rather than simply paring back government to its necessities.
It’s a must that lawmakers do not allow yesterday’s federal sugar high to become tomorrow’s state-tax hangover.
Despite these concerns about federal dollars though, this is still an overall cut in spending. And again, that’s a good thing.
But with so much bad content within the budget, a $400 million cut is nowhere near enough.
The fact of the matter is that the Revenue Stabilization Trust Fund accounted for $717 million in expenditures in FY25, a lot more than the cut we are seeing here. Meaning that the cut comes with an asterisk in some ways. Some things about this budget are very concerning, to wit…
- Medicaid Feasting on State Funds: Even after the overall budget cut, HB 1 still channels over $4 billion in state-sourced money into this expanded version of Medicaid, keeping taxpayers on the hook for 25% of an $18.99 billion, which is increasing from $17.38 billion the year prior. This is government taking money from hardworking taxpayers and redistributing it. This is money for roads, schools, and serious potential tax relief for Louisiana that is instead going into a welfare program. Medicaid expansion did not live up to the promises of how much the federal government versus the state would cover it and the state should not continue to participate in this charade.
- Still More Corporate Welfare: Hollywood handouts of $180,000,000, $173,400,000 in cash rebates for economic development, and $125,000,000 for rehabilitating real estate that the government deems historic. These things alone will cost nearly $500 million in state revenue. This is an example of those who can afford the best lobbyists get the best taxes, meanwhile overall rates fail to be relieved while people struggle economically. Just once we’d love to see someone look at that Motion Picture Tax Credit program and try to turn it into a film fund like Quebec, Northern Ireland and other places have put together, so that rather than paying the Harvey Weinsteins of the world to make Hollywood trash using Louisiana caterers and extras, we’re actually funding homegrown film production reflecting our own values, and having the state get a cut of the back end when those films become hits. Built correctly, that $180 million could pay for itself through royalties alone.
- Slush-Funds & Carve-Outs: Some $180 million of the budget falls into this category. Programs include things like the Louisiana Economic Development Rapid-Response Fund, a slush fund $39 million that exists for “economic development.” There’s the Mega-Project Development Fund, accounting for $21.5 million, literally forcing hardworking taxpayers to fund private developments rather than the free market. The Louisiana Economic Development Fund and the marketing costs equate to around $32.2 million putting taxpayers more on the hook for private industry. There’s the Two-Percent Fire Insurance Fund equating for about $28.6 million, presenting a mandatory skim of insurance-premiums to flow to local fire districts, sound good yet duplicating parish millages and grant programs without performance verifications that the funds will even solve the issues. There’s the Sports-Wagering Local Allocation Fund, accounting for $5.9 million, creating an automatic percentage of sports-bet tax collections which is shipped to parishes in proportion to gambling volume—not need––which incentivizes localities to promote more betting to grow their cut, which could be problematic in the eyes of some. This cronyism around the gambling industry further applies to Video-poker and sports-bet earmarks ($64 million) which sends state dollars to niche constituencies under the banner of “economic development” leaving the common person to pick up the tab for whoever can afford the best lobbyist. There is also the plus the Fortify Homes subsidy ($15 million) forcing taxpayers to cover the costs of their fellow citizens renovating their homes, at a time when merely buying a home is very challenging. There are Visitor Enterprise & Tourism Carve-Outs equating to $56.9 million, not letting the market handle this on its own. Each point here diverts state revenue into low-transparency pipelines that resist annual performance budgeting, foster crony favoritism, and hard-wire local earmarks—leaving fewer dollars available for broad tax relief or true statewide essentials.
- Structural Risk: Counting on federal cash to so much of the budget could be a great risk: the moment Washington’s matching rate falls—or another administration changes the rules—Louisiana could face big holes that democrats and RINOs would love to fill with state finds.
Cutting state spending is the right first step, but the content of the budget matters as much as the total. A budget that trims the edges yet keeps the worst things funded does not equate to victory for limited government conservatives. Louisianans deserve a lean budget that is free of crony corporate welfare and crony tax credits, does not put them on the hook for the healthcare of others, puts end dates on slush funds, and works on using extra money to get state debt in order.
The above points alone account for 20% of all state funds, which is not what Louisianans deserve. As stated before, the Revenue Stabilization Trust Fund accounted for $717 million in expenditures in FY25, a lot more than the cut we are seeing here. So is it really a cut?
Because HB 1 still funnels billions in state dollars to subsidies, carve-outs, and open-ended entitlements, while deepening an addiction to federal cash, we’d really like to see this budget get an aggressive revamp before it’s sent to the floor of either the House or the Senate.
HB 2, The Capital Outlay Bill
This instrument, as always, authorizes the use of general obligation bonds to fund a variety of state and local government projects, including infrastructure improvements, government building renovations, and new constructions. The capital outlay bill doesn’t directly appropriate funds, it is just a plan that specifies the projects and the costs thereof.
The total amount of funding for this year’s capital outlay bill is $10,966,561,802, with $8,050,202,317 authorized through general obligation bonds. The bill provides a framework for prioritizing projects but does not specify the timeline for funding each project. The issuance of bonds will be via the State Bond Commission through a process laid out by HB 3. The bond capacity is $1,806,082,395, meaning the annual bond debt incurred would be capped out at that number.
What’s in this thing is much more than just basic infrastructure. It involves significant funding for renovations to government buildings, colleges, and new local government buildings. The bill authorizes $8,050,202,317 in general obligation bonds, with a bond capacity of $1,806,082,395, managed by the State Bond Commission. This means that the state is choosing to incur debt in order to spend money they’ve yet to bring in, a caveat to a balanced budget requirement.
Maybe let’s not do that when interest rates are higher than recent norms?
This bill piles future debt on Louisiana families instead of the state simply living within its means. Accumulating more debt before our economy is poised for growth to enable paying that debt off isn’t a good idea. It’s unlikely the capital outlay bill wouldn’t pass, or even that it would be trimmed down, which means we’re going to want some fiscal discipline out of the State Bond Commission in reining in what projects move forward out of this bill.
Lotsa luck with that.
HB 3 – Bond Authorization
This bill renews Louisiana’s five-year capital-improvement program. It repeals all unused bond authorizations issued before July 1, 2025—except refunding bonds and the special 2006 hurricane-recovery series—and immediately authorizes new general-obligation bonds for the projects listed in HB 2. The State Bond Commission is empowered to sell those bonds, subject to the annual debt capacity, and must secure reimbursement contracts and reserve funds so designated revenues cover the debt service. The act sunsets on June 30, 2026, unless a bond sale, cash line of credit, or construction contract has been executed for a project.
And it carries the same problems the capital outlay bill carries.
HB 460 – Moving Last Year’s Surplus Into Pensions
This bill simply appropriated the surplus from the prior fiscal year into state retirement accounts, as is constitutionally required. It does not do anything else. Of all of the budget bills, this is one we don’t have any real problem with.
We really wish we could get excited about a $400 million budget cut. But there is way, way too much fluff still left in that budget. We’re long, long overdue for a re-examination of the catastrophic damage John Bel Edwards did to the state’s fiscal situation with that Obamacare Medicaid expansion, and with the discussions of the Big Beautiful Bill in Washington beginning to center around asking states to pick up 50 percent of Medicaid costs rather than just 35 percent, Louisiana has its cheese flapping in the wind right now.
This is the year where a stepdown in the size of our Medicaid program, not to mention some aggressive experimentation in healthcare delivery to people covered by Medicaid with an eye toward something sleeker and more efficient than the Soviet-style model Edwards put us on, should have been front and center. It isn’t, and as a result we have a disaster coming.
It sure would be nice if our elected officials would recognize that and act accordingly. Guess we’ll have to wait another year.