Landry, Louisiana lawmakers look to divert $700M from state savings to construction projects

Rep. Jack McFarland said lawmakers might redirect $700 million that is supposed to flow into a savings account into construction projects instead. (Greg LaRose/Louisiana Illuminator)

Gov. Jeff Landry and legislative leaders are looking to redirect over $700 million that would typically go into a state savings account toward one-time building projects for transportation, water systems, college campus maintenance, prisons and juvenile justice detention centers. 

Budget architects in the Legislature said the spending on transportation items alone could be as much as $400 million, though they haven’t released a list of specific projects yet. Lawmakers would have to vote by a two-thirds majority in each chamber to spend the $700 million on construction instead of socking it away in savings.

The money comes from business tax collections. State corporate and franchise taxes that exceed $600 million annually and a portion of oil and gas production revenue that is above $660 million per year automatically goes into a state savings account called the Revenue Stabilization Trust Fund.

This year’s deposit into the savings account would typically be a little over $700 million, but lawmakers would like to use the money to address some outstanding building needs instead, Senate President Cameron Henry, R-Metairie, and House Appropriations Committee Chairman Jack McFarland, R-Jonesboro, said in interviews this week. 

For example, Landry’s aggressive criminal justice agenda is expected to require an expansion or refurbishment of prisons for adults and minors.

State and local authorities are still struggling to find enough space to house all the underage people who are arrested. Some are paying large amounts of money to put them in facilities outside of the state or hundreds of miles away from their home jurisdiction. 

With Landry’s encouragement, lawmakers voted earlier this year to automatically put 17-year-olds arrested for crimes in adult jails instead of juvenile facilities, but sheriffs are saying they don’t have the space they need to take in underage detainees.

Federal law requires 17-year-olds receive services that adult jails aren’t equipped to offer, according to the sheriffs. Juveniles also need to be separated from adults in jails in order to comply with regulations of the federal Prison Rape Elimination Act. Those restrictions require more space.

Some of the $700 million is expected to deal with these jailhouse challenges, Henry said, but most of the money would go toward other projects, such as roads, bridges and water system upgrades. 

Lawmakers are dealing with constraints in their traditional state construction budget plan. Last year, the Legislature, under different leadership, tied up much of Louisiana’s standard capital budget and made it harder for the state to spend money on new building projects over the next few years. 

By tapping into the trust fund, Landry and the new leaders of the Legislature can still advance some of their own building agenda without having to wait two or three cycles. Approximately $2.3 billion will also remain in the Revenue Stabilization Trust Fund, even if this year’s $700 million deposit is diverted to those other priorities.

The fund was initially designed to only be tapped in an emergency when it had a balance of less than $5 billion.

Once the fund is over $5 billion, the law allows lawmakers to easily withdraw 10% of its balance to spend on infrastructure and building projects. While it is under $5 billion, as it is now, legislators need to take a two-thirds vote to tap into its resources. 

Legislators had attempted to make it harder to withdraw money from the Revenue Stabilization Trust Fund just last year.

Lawmakers placed a constitutional amendment on the November 2023 ballot that would have added more steps before the legislators could tap into the fund. It failed to pass on a 56% to 43% vote statewide.

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