Louisiana

State Budget Practice Report Cards and Budget Resource Guide

While Louisiana frequently resorted to budget maneuvers to achieve balance for fiscal 2015 through 2019, a lessening of reliance on one-time measures in the later years of the study period buoyed its performance enough to leave the state with a C average for the category. An increase in sales tax rates, combined with deep cuts in agency spending, helped reduce Louisiana’s use of maneuvers.

Still, in 2017 alone, Louisiana deferred $152 million of Medicaid reimbursements to future years; used cash generated from a bond refinancing to cover operating expenses; and transferred money to the general fund from other funds. Over the next two years, the state continued to push Medicaid reimbursements into the future.

Louisiana scored worse in legacy costs, averaging a D. While it provided annual funding for pensions in line with actuarial recommendations, its pension funding ratio of 67 percent in 2019 was 4 percentage points below the total for all states. Louisiana also failed to make annual actuarially recommended contributions for other postemployment benefits (OPEB), primarily health care.

In contrast, Louisiana earned a top A average in reserve funds. As part of an effort to protect itself from the revenue swings that afflict states producing oil and natural gas, it has established solid policies for its Budget Stabilization Fund, including rules for disbursements and replenishments. The state also takes revenue volatility into account by tying deposits to the rainy day fund to excess revenues from severance taxes.

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 2021 Volcker Alliance report, Truth and Integrity in State Budgeting: Preparing for the Stormwhich 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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