As Louisiana’s economic fortunes under Republican Gov. Jeff Landry continue to improve, it can’t rob Peter to pay Paul if it expects the progress to continue.

With the Legislature endorsing overall tax cuts and the Landry Administration hustling that grabbed hundreds of billions of dollars in new economic development, Fitch Ratings noticed and upgraded the state’s general obligation bond debt (it also recently has upgraded several other kinds of state issuances). That means in the constant revolving door of debt that state issues will come at lower interest rates, saving taxpayer dollars.

This will provide some minor relief from projected budget deficits beginning next fiscal year, which the state pegs will grow from $541 million next year to $1.23 billion by fiscal year 2030. Another debt-related maneuver that could ease the burden somewhat also would be to take the bulk of the recently-forecast surplus and pay down debt.

However, legislative leaders have expressed a desire to pump much of what could go to further debt reduction into transportation. Yet the device already exists to do that, and to a greater degree with the added bonus that it would operate in a more fiscally-prudent manner.

In 2021, the Legislature passed a law (with large majorities that discouraged big-spending Democrat former Gov. John Bel Edwards from vetoing it) that over time would transfer 60 percent of the avails from vehicle taxes annually into a construction sub-fund of the Transportation Trust Fund. A chunk of that, up to $160 million annually, would go to the Megaprojects Fund for designated high-profile road works.

This makes good fiscal sense. Vehicle tax receipts should go to finance items related to vehicle usage of state assets. Instead, for many years lawmakers chunked these into the general fund. But the switch never went into effect entirely.

In the third special session of Landry’s first year, as part of tax overhauls to make this rejiggering revenue neutral at worst, legislators abrogated nearly all of the transfer for the next two years, cutting back to just $40 million for construction related to Interstate 10 (part of the Megaprojects Fund). The full transfer resumes for next year, which would disgorge an estimated $380 million more into construction, over $100 million more than from the one-time surplus available, and it would be available annually (until the listed projects are complete many years from now, which then should prompt changes that ensure continued use for vehicle-related expenses rather than unrelated operating expenses).

In fact, the Fitch report warns against allowing the intended level of vehicle taxes collected to resume, as well as counsels against letting the sales tax rate fall from 5 to 4.75 percent as planned that would trigger the deficit jump in FY 2030. Otherwise, it says it could lower ratings.

The state should ignore that. It faces a $19 billion backlog in road needs that only is getting worse. A one-time shot in the arm is no match for a constant transfusion over many years of greater size, and putting all of the latest surplus towards paying down debt and/or unfunded accrued liabilities (along with other small efforts at reducing questionable, if not wasted, spending and excising counterproductive tax exceptions) will cause recurring spending reductions for decades to come. And an improved roads situation will do nothing less than improve economic development prospects and decrease costs to business and residents.

These savings won’t match removal of revenues from the transfer or roll off of a quarter penny. Yet with the promise of significant economic growth ahead, the savings realized that will shrink the gap could be overcome by collections increased by that growth. If not, then the state could tap its Revenue Stabilization Trust Fund, now swelled to $2.4 billion, which would require a two-thirds vote in each legislative chamber, as a bridge. That fund exists to collect a portion of revenues from volatile sources when they are at the high end; however, guardrails should be placed upon this tactic to make these withdrawals short in duration and limited in size, as already the Fund has become routinely used for less salutary purposes.

It will take time for the changes cited by Fitch as reasons to upgrade the state’s rating to begin paying off in increased revenues. That effort shouldn’t be snuffed out before it can come to fruition.