(Bloomberg) — Louisiana Governor John Bel Edwards unveiled a budget so packed with increased spending on teachers, higher education and construction projects that the once-strapped state accompanied its presentation to the legislature with music from The O’Jays and photos of smiling babies.
The plan for fiscal 2022-23, starting July 1, would give all kindergarten through twelfth-grade teachers at least a $1,500 pay raise, boost funding for the state’s colleges and universities and allocate $1.1 billion for critical infrastructure. One proposed project would be a new bridge over the Mississippi River in Baton Rouge.
“Louisiana has faced many hurdles and setbacks over the past several years, but we are on the precipice of a recovery and resurgence across all of our communities if we wisely invest our budget surplus and federal funding resources on making long-term projects that maybe once seemed like a dream,” Bel Edwards outlined in a statement on Monday.
The state was slow to recover from the recession that accompanied the financial crisis more than a decade ago, then was hit again by the economic halt at the start of the coronavirus pandemic. Its fiscal picture brightened dramatically in the last year, boosted by federal stimulus aid and stronger-than-expected tax collections.
Louisiana certified it had a $700 million surplus for the last fiscal year and will have $853 million in excess revenue this budget cycle, according to state estimates. That’s on top of the $1.4 billion of federal stimulus dollars allocated to the state through the pandemic-era American Rescue Plan that hasn’t been earmarked yet.
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Jay Dardenne, the state’s commissioner of administration who is responsible for Louisiana’s finances, presented the budget proposal to the joint legislative budget committee on Tuesday. One of his slides showed a photo of an overjoyed baby with the caption: “Be Happy. Be Disciplined. Be Smart.”
As Dardenne explained the state has almost $3 billion of extra funds at its disposal, the song “For the Love of Money” by The O’Jays played, including the lyrics, “You want to do things, do things, do things, good things with it. Talk about cash money, money.”
“As we think about the money that we have, it’s kind of staggering for all of us to see these kind of numbers, given the discussions we have had in the past about the budget challenges we’ve faced,” Dardenne said.
The state is expected to rake in $10.9 billion of general tax dollars in the next fiscal year, $771 million more than the forecast from last May, according to the budget presentation. The state collected more than anticipated from a variety of levies, including sales, corporate and vehicle taxes.
The rosy financial picture has helped Louisiana’s creditworthiness. Moody’s Investors Service last year boosted its outlook on Louisiana to positive, saying the state has made “significant progress” in restoring its financial reserves and liquidity. The state’s Aa3 rating could be upgraded if long-term growth is in line with the nation’s and Louisiana diversifies its economy to offset volatility in the energy sector, according to a Moody’s report earlier this month.
“Our pledge is to craft a responsible budget that doesn’t create funding problems in future years because it aligns one-time funding with one-time expenditures,” Bel Edwards said. “While we are blessed to have budget surpluses and ample federal funding this year, it would be unwise to dedicate these dollars to recurring expenses, which is why our budget focuses them on longer-term investments.”
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