Louisiana doesn’t need to get ahead of itself upon reception of impending budgetary good news.

Last week, the Joint Legislative Committee on the Budget approved its typical October fiscal status statement, which is a report made by the Division of Administration on where it determines the state’s final fiscal picture relative to the budget that expired at the end of the state’s fiscal year. DOA now sees the fiscal year 2026 budget producing a surplus of $565 million. While predicted expenditures and other requirements were thought to have risen about $100 million to around $13.1 billion in general fund dollars, revenues shot up nearly $1 billion, with the difference being carryforwards and transaction timings.

Reasons why things turned out rosier than expected DOA didn’t say nor did any committee members ask. Likely a burst of economic activity during the term of Republican Gov. Jeff Landry primarily in the energy sector and in construction of data centers, soon the first of which will commence operations, explains this.

DOA should recommend something like this towards year’s end to the Revenue Estimating Conference. The Legislature’s economist will come up with something not too different, so it becomes extremely likely that something like this figure will become official. If it does, since this comes from a past year budget, a quarter or around $141 million must go to the Budget Stabilization Fund, a similar proportion and amount must pay down the state unfunded accrued liabilities in four major pension plans, and the remainder only can be spent on reducing debt, state infrastructure, coastal protection, or matching federal highway construction grants.

The paydown on retirement debt will allow for fewer operating dollars diverted from state and local governments to accomplish that. A similar dynamic works with earlier debt defeasance, meaning the state owes less in interest in the future. Topping off the BSF means more would be available for future deficits, where a third of the fund balance can be spent in non-consecutive years if the official forecast for recurring revenues for the upcoming fiscal year is less than the official forecast of recurring revenues for the current fiscal year, or if a deficit for the current fiscal year is projected due to a decrease in recurring revenues.

Thus, next year fiscal relief will occur with half of the excess money. However, legislative leaders have signaled they intend to spend the other half on the other three items: state construction, federal-backed roads, and coastal protection. These one-times uses aren’t a bad idea, but there is a more pressing need.

Not discussed at the meeting were the forecasts of future revenues and expenditures from FY 2028 and beyond. That next year is poised to be $541 million in the red, then the next $789 million, and for FY 2030 a whopping $1.23 billion in large part due to rolling off a quarter cent of sales tax.

Committee Chairman GOP state Rep. Jack McFarland brushed off that pessimism, saying tax collections had come in $330 million above budgeted and with $264 billion in private sector investment on the way better-then-expected revenue inflows should be on the horizon. Further, the sharp increase in government spending triggered during the Democrat former Gov. John Bel Edwards era Landry has stopped in its tracks. That surpluses in the half-billion dollars range have lately manifested gives credence to his view.

Still, Landry also has stumped for the elimination of the income tax and the 2030 roll off looms. Therefore, most of the half unspoken-for surplus should go to UAL and/or debt reduction. That will free up more money now to reduce projected deficits. Some could go to matching federal dollars that otherwise soon expire if not utilized and if there is genuine need for something, but other than that the chances of avoiding deficits and tax relief magnify with this strategy as opposed to plowing the half entirely into bricks and mortar.

State elections occur next year and legislators may wish to build stuff to impress constituents, but that short-term view won’t bring the better long-term benefits.