A new nationwide report card scoring states’ budget processes gives Louisiana a mixed bag of reviews.
The Volcker Alliance, a nonprofit group established by former Federal Reserve Bank Chairman Paul Volcker, released the annual report, Truth and Integrity in State Budgeting, last week.
The report covers fiscal years 2017, 2018 and 2019, giving each state a grade in five areas: budget forecasting, budget maneuvers, legacy costs, reserve funds and budget transparency.
Louisiana’s three-year average varied from an A in reserve funds, B’s in transparency and budget forecasting, a C in budget maneuvers and D in legacy costs.
The state’s report card notes “Louisiana has solid reserve fund policies,” as a result of the “volatile revenues” from the oil and gas industry. It was one of 18 states to earn an A grade in that category.
Louisiana’s D grade for legacy costs stems from public pensions and post-employment benefits like health care. The report says Louisiana’s 68% pension funding in 2018 was two percentage points below the national total.
The C grade was given for budget maneuvers because of the state’s use of one-time revenues for recurring expenses, including deferrals for Medicaid payments in 2018 and 2019.
Despite the recent delays in the annual budget forecasting process, the group gave Louisiana B’s for budget forecasting and transparency because the state doesn’t report a budget for deferred infrastructure maintenance costs and doesn’t follow recommended practices for multiyear expenditure forecasts.
The only category in which Louisiana’s grade changed during the three-year period was in budget maneuvers, improving from a D in 2017 to B’s in 2018 and 2019, resulting in a three-year average C grade. In that time, the state began following the group’s best practices for revenue and cost shifting and in funding recurring expenditures with debt.
Across the board, all 50 states earned an average B in all categories, except for a C in legacy costs. Texas scored the same or worse than Louisiana in all five categories, earning a D- (the lowest possible grade) in legacy costs. Read the full report.
