BATON ROUGE, La. (AP) — The Louisiana Legislature's chief economist sought Tuesday to temper suggestions that an estimated $300 million-plus state surplus is the sign of a booming economy or an indication the state will be awash in extra cash this year.
Greg Albrecht told the state's top higher education board, the Board of Regents, that Louisiana's economy has shown "modest improvement," but that he doesn't expect economists to recommend a boost to this year's income forecast by a similar $300 million amount.
"That's not going to happen," Albrecht said.
The surplus is excess cash remaining from the budget year that ended June 30, tied to better-than-expected personal income and corporate tax collections and a slight uptick from oil prices. Sales tax came in slightly lower than projected, Albrecht said, lessening the surplus' size.
Louisiana's surplus has provoked disputes. Anti-tax advocates and conservative Republican lawmakers who voted against a sales tax renewal earlier this year said the surplus demonstrates over-taxation. Democratic Gov. John Bel Edwards said the surplus indicates Louisiana's economy is doing better than predicted.
Albrecht said while the outlook for the state is positive, some of the reasons driving the surplus don't involve underlying economic trends. The state still has one of the highest unemployment rates in the nation.
"I don't think I can say that this is all about income and employment growth," the chief legislative economist said. "It's really modest growth."
For example, he said some improved corporate collections likely stem from cuts to tax break programs that lawmakers enacted over the last several years, while another portion stems from broader economic conditions.
"Corporate income and franchise tax, those are driven by the international and national economies. They have nothing to do with the state's economy," Albrecht said.
As for the higher-than-projected personal income tax collections last year, Albrecht said those appear to mainly involve the impact from federal tax changes. But he warned if the state miscalculated in adjustments to its income tax withholding tables, that could mean higher tax refunds to people in the current budget year.
Albrecht expects this year's state income forecast could be modestly bumped up, to account for improved oil prices and to tweak corporate tax collection estimates, while lessening other tax projections that he said appear overstated.
Albrecht's reserved comments about the implications of the surplus came as Edwards touted new federal figures released Tuesday showing personal income in Louisiana grew faster than nearly every other state in the second quarter of 2018. Louisiana's 5.9 percent growth rate was above the national average of 4.2 percent.
"Louisiana's businesses are doing better and people are bringing home more in their paychecks," Edwards said in a statement. "This is excellent news, and just another sign that Louisiana is moving in the right direction."
Edwards and lawmakers will craft a surplus spending plan in next year's legislative session. Under Louisiana's constitution, surplus dollars can only be spent on certain one-time expenses, like debt payments and construction projects, not ongoing agency expenses. A portion must be earmarked for the "rainy day" fund and to lessen retirement debt.
Higher education leaders want some of the money used to chip away at a $1.6 billion backlog in campus maintenance projects. Edwards has said college projects will be under consideration for the spending.
– By MELINDA DESLATTE, AP reporter
