By Victor Skinner | The Center Square contributor
(The Center Square) — The Louisiana Revenue Estimating Conference on Monday increased the state’s income projections for the current and next fiscal years, boosting figures for the state general fund by $350 million for FY 22 and $104 million for FY 23.
Legislative Fiscal Office economist Deborah Vivien told members of the Revenue Estimating Conference state finances are facing many of the same issues in May as when the REC last met in January, but new actions from the Federal Reserve and the Russian invasion of Ukraine has added to the “super-heated economy.”
In January, economists predicted about $1.66 billion in additional revenue for fiscal year 2022, with about $847 million of that for the state general fund. The forecast also boosted revenue projections for fiscal year 2023 by $963 million, with $771 million of that for the state general fund.
Vivien revised those figures higher on Monday, adding another $538 million in revenues for fiscal year 2022, and $267 million more for fiscal year 2023. The revision added $350 million to the state general fund for the current fiscal year and $139 million to the state general fund for fiscal year 2023, which begins June 1.
“I think it needs to be said, all of the things we’re talking about that’s heating up these numbers, are big question marks going forward,” she said. “We don’t know how they’re going to work out.”
“I’m not forecasting a recession, even though I’m sure you’ve heard recession talk out there. I’m forecasting the soft landing,” Vivien said.
Administrative economist Manfred Dix offered a similar soft landing forecast, though he projected a smaller increase of $104 million for the state general fund next year.
“The question is, is (the big revenue increase in the current fiscal year) the new baseline, or is it somewhat of an anomaly?” Dix said. “I think we are agreeing here that probably it was, at least let’s qualify it as a somewhat of an anomaly. It’s not the new baseline to project the revenues, you have to kind of taper it down because the revenues in FY 22 were too high.”
The REC — comprised of Senate President Page Cortez, R-Lafayette, House Speaker Clay Schexnayder, R-Gonzales, economist Stephen Barnes, and Commissioner of Administration Jay Dardenne — ultimate opted to adopt the more conservative forecasts for each year, taking the LFO projection for fiscal year 2022 and the Department of Administration’s prediction for fiscal year 2023.
“It’s almost insignificant between the two” forecasts, Cortez said. “I guess if you’re going to drill down, the fiscal office shows a greater individual personal income growth in 23, with not quite as much sales tax.”
The REC adopted forecast is more than enough to cover a proposal by Gov. John Bel Edwards to further increase $1,500 raises for teachers and $750 raises for school support staff to $2,000 for teachers and $1,000 for support staff, though it remains unclear whether lawmakers will act on the proposal.
The bigger raises would add an estimated $50 million to the $148 million recurring cost of the $1,500 and $750 raises. House Concurrent Resolution 23, which includes $4 billion in school funding and the smaller raises for next year, cleared the House Appropriations Committee on Monday morning and now moves to the full House for consideration.