Heading into the next budget year, state lawmakers will no longer be staring down the threat of a budget shortfall to the tune of hundreds of millions of dollars.
The reversal of circumstances is the result of a two-week special session in November during which they approved major changes to the way Louisiana generates and allocates tax revenue.
Rather than a projected state budget deficit totaling nearly $340 million, state lawmakers are now expected to have a surplus of state funds for the upcoming budget year that begins in July, according to the official forecast unveiled by a state economist Thursday.
In May, the last time state leaders approved an official forecast, the budget outlook appeared bleak. That was in large part due to temporary sales and business utility taxes previously set to expire in July.
The revised official projections show lawmakers will have $447 million more in revenue to work with -- eclipsing the $340 million shortfall figure.
"It's enough to put us whole without having to make any cuts to education or healthcare," said Commissioner of Administration Taylor Barras, Gov. Jeff Landry's top budget official. "It's refreshing that the budget exercise in the spring will not be about cutting the budget."
Thursday's meeting of the four-member panel known as the Revenue Estimating Conference is the first time the public has a view into the potential impact of the November tax special session on the state budget outlook.
The new December forecast will form the basis of spending plans that state budget negotiators put together in the spring. The state is projected to bring in $12.15 billion from taxes and other fees, up from $11.7 billion previously expected.
Also, in the current budget year, which runs through the end of June, state lawmakers have about $30 million in additional expected revenue under the Revenue Estimating Conference's new projection.
The conference was set up in the 1980s to guard against flawed revenue estimates, including inflated projections that could be politically good for lawmakers by boosting spending but bad for state finances. This year's members are Barras, House Speaker Phillip DeVillier, Senate President Cameron Henry and Stephen Barnes, an economist and professor of economics at the University of Louisiana-Lafayette.
The December forecast accounts for changes to income, sales and other corporate taxes approved as part of the package of changes championed by Landry in the recent special legislative session.
Instead of expiring, the state sales tax will increase by a half-cent beginning in January and the business utility tax will become permanent. The sales tax base will also expand to include additional digital goods and services.
In the other direction, income taxes for individuals and businesses will fall.
In part, lawmakers are expected to have more money to spend for the 2025-2026 fiscal year due to roughly $280 million being temporarily diverted away from a special fund for transportation projects and placed in the state's general fund. Another bump in revenue is expected from increased sales tax collections from motor vehicle sales.
Overall, in comparison to the previous forecast in May, projections for sales tax collections are now up by $1.3 billion, individual income tax collections are down by $995 million and corporate tax collections are down by $181 million.