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Balancing the FY03 Budget

• As approved by the Legislature, the FY03 State Budget is in balance. Appropriations from all means of financing, as adopted, total approximately $16.3 billion, of which State General Fund (Direct) funding amounts to $6.6 billion. The FY03 total budget represents a 1% increase over the FY02 budget.
   

• Although the Legislature voted to reduce taxes by roughly $24 million, the Senate was able to put together a plan to maintain the same expenditure level as proposed in the Executive Budget and fund additional initiatives by utilizing other means of financing. Actions by the Senate Finance Committee that provided additional revenue to support the same expenditure base that was formerly tied to full implementation of the current tax base included the following:
    

  • $23.4 million Defeasance - to accomplish a $23.4 million defeasance, the Senate had to utilize $23.1 million in Cash Capital Outlay....that is, we reduced cash capital outlay projects by $23.1 million in order to use the monies for a bond defeasance in FY02. The defeasance frees up money in FY03 without adversely affecting the FY04 budget because the existing debt service schedule will decrease by $23 million in that year.
      

  • $9.1 million in Means of Financing Swaps in the Departments of Education and Agriculture. In the Department of Education, $6.7 million in federal funds replaced State General Fund. In the Department of Agriculture, $2.4 million in Louisiana Agriculture Finance Authority (LAFA) monies replaced State General Fund.
      

  • HB 266 dealing with the licensing tax on insurance premiums was used to address a deficit in the Firefighters' Retirement System. The State will receive roughly $5.7 in funding from the increase in insurance premiums above the FY02 official forecast.
      

• In April, the Revenue Estimating Conference recognized an additional $17.4 million dollars for FY02. The additional money subsequently was used for the FY02 Supplemental Appropriation Bill. The Conference also recognized an additional $12.1 million for FY03. The recognition of the additional $12 million for FY03 and an increase in dedicated funds (SELF Funds) helped fund budgetary needs that were not included in the Executive Budget as originally proposed to the Legislature in early Spring.
    

• Specific Expenditures in HB 1 - "Supplemental Section" expenditures are no longer directly linked or contingent upon specific revenue sources (such as the TOPS program linked directly to the passage of the suspension of the $25 per child education tax credit). Instead, the Supplemental Section is contingent on all revenue sources up for renewal during the 2002 Regular Session. The effect of this change means that in the event a particular tax measure did not pass, all expenditures in the Supplemental Section will share a pro rata reduction.
    

• At the time of publication of this document, all of the tax measures supporting items in the "Supplemental Section" have been enacted and were recognized and incorporated into the FY03 Official Forecast by the Revenue Estimating Conference at its June 20 meeting.