Louisiana

State Budget Practice Report Cards and Budget Resource Guide

Like other states that depend on volatile revenues from oil and natural gas production, Louisiana has solid reserve fund policies, similar to the best practices cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action. The state’s fiscal buffer against revenue declines helped Louisiana earn a top A average for reserve funds in fiscal 2017 through 2019. Driving the grade was the state’s link between rainy day fund deposits and historical revenue volatility, as well as rules governing fund disbursements. Reserves can be tapped only if the official revenue forecast for the current year is less than the previous year’s receipts, or if a shortfall is projected.

In contrast to its mark for reserve funds, Louisiana received a D average, the second-lowest grade possible, in legacy costs, which include public worker pensions and other postemployment benefits (OPEB), principally health care. The state’s 68 percent pension funding level in 2018 was 2 percentage points below the total for all states. While it made its full actuarially determined contribution for public worker pensions, Louisiana failed to do the same for OPEB, which is funded on a pay-as-you-go basis. 

Louisiana’s C average in budget maneuvers stemmed from budget-balancing techniques that used one-time revenues to support recurring spending. The techniques included spending deferrals in fiscal 2018 and 2019 that pushed Medicaid payments into future years and the use of special funds in 2017 to cover general fund expenditures. 

Louisiana scored a B average in budget forecasting and transparency. The transparency mark was held down by an absence of budgetary reporting of deferred infrastructure maintenance costs, a shortcoming shared by all but five states as of 2019. 

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Actwhich proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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