1.16.23 – Louisiana Illuminator
Gov. John Bel Edwards and Louisiana legislators agree that pay raises for K-12 school teachers, roads and bridges will likely benefit from the extra $1.5 billion in state revenue that is expected to arrive over the next 18 months. But questions remain about what other portions of state government might see an increase in support.
The governor’s budget chief, Commissioner of Administration Jay Dardenne, said education and one-time spending projects would be the governor’s priorities for the additional money. The legislature’s Republican leadership said education and infrastructure are also their top concerns.
On top of the $1.5 billion, the state is sitting on a sizable surplus of $726 million from its previous budget year, but there are legal restrictions on how that money can be spent. At least a quarter of this surplus must go into the state’s “rainy day” savings account. Another 10% needs to be used to pay down state retirement system debt. None of it can be used for ongoing expenses.
Despite all the extra cash, Dardenne and Republican lawmakers expressed a need to be conservative with the state’s finances because Louisiana has a fiscal cliff looming in 2025. That’s when a sales tax cut is expected to cost the state approximately an annual $800 million in revenue.
For that reason, Dardenne and legislative leaders have said they want to limit the extent to which the additional money goes to cover ongoing expenses that will need to be paid for years to come.
Dardenne won’t unveil the specifics of the governor’s budget proposal until Feb. 17, but here’s where he and legislative leaders said they would like to see the money go.
State debt
One large expense legislators have repeatedly brought is the $300-million-plus still owed to the federal government for the hurricane protection system built around New Orleans and its suburbs after Hurricane Katrina. Senate President Page Cortez, R-Lafayette, said there will likely be a push to use excess money to settle that bill.
Dardenne said the state is still hopeful the federal government will agree to wipe out this debt. Louisiana has argued the state should receive credit for spending hundreds of millions of its own dollars on hurricane protection, covering the cost of this final payment. So far though, federal officials haven’t agreed to walk away from it.
Transportation projects
Over the past few years, Edwards and the legislature have dedicated hundreds of millions of more dollars to transportation projects, but inflation and building material shortages have driven project costs higher than initially estimated.
Dardenne, Cortez and House Speaker Clay Schexnayder, R-Gonzales, all said they want to put a lot of the state’s additional money toward these cost overruns. Without more support, it will be difficult to get the transportation projects that have received money in previous years finished, they said.
If new transportation projects receive funding, they will be more modest in size than those that gained the most of the attention last year.
In 2022, Edwards and legislators agreed to put much of the state’s excess money toward large projects such as a Mississippi River bridge crossing near Baton Rouge and the Interstate 10 Lake Charles bridge. This year, Dardenne and Cortez said regional transportation projects will be a higher priority.
Cortez said the state needs to look at building out infrastructure in Livingston and St. Tammany parishes, where state roads and bridges haven’t kept up with a population explosion.
K-12 teacher pay raises
While lawmakers emphasize they are reluctant to increase the state’s ongoing expenses, many appear willing to make one exception. Several lawmakers said they would support a permanent pay increase for K-12 school teachers, though no specifics were given about how large it might be.
“Everything we have in society comes from education,” Cortez said. “We need to put a priority on that.”
The governor has pushed teacher pay raises totaling $3,300 overall during his seven years in office, but Louisiana is still behind neighboring states when it comes to teacher compensation. Louisiana’s average public school teacher pay is below $53,000, while the average for most other states in the region is above $55,000.
Sen. Sharon Hewitt, R-Slidell, Republican Caucus Chairman and a candidate for governor, said Louisiana has no choice but to raise teacher pay again in order to remain competitive with the region.
Still, Republican House members expressed concern about the price of another teacher pay hike, especially with a fiscal cliff coming in just two years.
“We can’t do like after Katrina and put the pay raise in, but then we don’t have the dollars to keep it in,” Schexnayder said in an interview.
Cortez said if teacher pay is increased, other areas of state government should not see increases to their budgets.
“Others are going to have to be at a standstill or reduced,” he said.
Incentives for homeowner’s insurance providers
The governor and legislators will put some of the state’s extra money toward an incentive fund aimed at curbing sky-rocketing homeowner insurance rates. Insurance Commissioner Jim Donelon told lawmakers in December it would take at least $45 million to get such a program off the ground.
Donelon wants to use that extra funding to lure more insurance companies back into Louisiana’s market after major hurricanes in 2020 and 2021 caused several homeowner’s policy providers to go belly up. If more companies write homeowners insurance policies in Louisiana, then the cost of those policies will go down, he said.
This money is needed so urgently that Edwards and legislators are considering a special session in February to vote on the $45 million allocation.
Maybe higher education pay raises
Dardenne said he wasn’t sure whether the governor would be able to include another college and university faculty pay raise in the budget this year. Republican legislative leaders also said increasing faculty pay, after doing so last year, wouldn’t necessarily be a priority for them.
Instead, lawmakers said they would like to focus on construction and maintenance at college campuses. Dardenne said the governor would push for some of the additional money to go toward university maintenance projects as well.
Child welfare, juvenile justice services
During his radio show last month, the governor said he intended to increase funding for child welfare staff in the Department of Children and Family Services .
The Times-Picayune has run a series of stories detailing problems within the agency that have caused at-risk children to be overlooked. Small children have died of drug overdoses, even after their living situations were reported to the state. Child Welfare staff have said they are overworked and unable to keep up with their cases.
“We have to make sure we are funding those positions at an amount that will allow us to recruit and retain qualified workers,” the governor said last month.
The agency is currently offering extra pay in an effort to lure more people to their open child welfare positions and expand the staff. Dardenne said the state is considering extending this incentive pay, and may look at adding new programs that could help alleviate the existing staffing shortage.
Legislative leaders, however, did not seem convinced a large influx of cash for child welfare services would improve outcomes.
“There’s a lot of turnover [in the Department of Children and Family Services], but it’s not always because of money,” Cortez said. “I don’t know what can be done. We need to think outside the box.”
The Office of Juvenile Justice is also struggling to keep children and young adults safe in its custody. Its secure care facilities for children have been overrun by violence, riots and escapes – so much so that the state has resorted to housing a few youth in its custody at Louisiana State Penitentiary at Angola, an adult prison.
Like child welfare services, the juvenile justice system has offered incentive pay to attract more people to work in its facilities. Dardenne said the governor is also considering a permanent boost in pay and new programs in that agency as well.
Pregnancy, parenting
Women state senators on both sides of the aisle are interested in boosting funding for pregnant people and new parents, particularly in light of Louisiana’s child welfare crisis and changes in the state’s abortion laws.
Louisiana has had a near-total abortion ban in place for the past six months, and women legislators have indicated that increased funding for programs supporting at-risk pregnant people and new parents might be in order. They also want to increase assistance for adoption services.
“When you’re asking people to keep their babies, you have to have the resources to support them,” said Hewitt, who opposes abortion and supports the state’s abortion ban.