BATON ROUGE–Federal and state budgeting policies could force Louisiana into structural budget shortfalls approaching $300 million in fiscal 2027 and more than $1 billion by 2029, the director of a nonpartisan think tank, Invest in Louisiana, told the Press Club of Baton Rouge on Monday.
“These aren’t my numbers,” said Jan Moller, the group’s executive director and a former statehouse reporter for The Times-Picayune. He said the numbers come from the state Legislative Fiscal Office and the Legislature’s Joint Budget Committee.
Moller said the shortfall predictions are based on what he called “simple math.”
“State revenues peaked in 2024 and are slowly going down, certainly on an inflation-adjusted basis,” Moller said. “And the projected costs of running state government are going up.”
Invest in Louisiana began in 2006 as the Louisiana Budget Project, an initiative of the Louisiana Association of Nonprofit Organizations with a vision for a fairer, more inclusive Louisiana economy. The group, which became a stand-alone organization in 2013, typically focuses on issues that affect working people and the poor.
While the federal One Big Beautiful Bill Act cut taxes “most heavily for those at the very top of the income pyramid,” Moller said, it made up for that loss of revenue with cuts to the federal budget, significantly in Medicaid and the Supplemental Nutrition Assistance Program (SNAP).
One in three Louisiana citizens gets health care through Medicaid because “we have a lot of people who don’t make enough money to qualify for or (are) able to afford private insurance,” Moller said. But reporting requirements in the new law are likely to shrink the Medicaid rolls, he said.
“The vast majority of people who (will) lose their health care are going to be people who are actually still eligible, but they just didn’t fill out the paperwork in the right way,” Moller said.
The law also will diminish the state’s ability to use assessments to hospitals, nursing homes and pharmacies to finance Louisiana’s share of Medicaid costs.
“We’re still doing the math on this, but that is going to add enormous costs to the state–we think at least $200 million a year–to the cost of the Medicaid program,” Moller said.
As for the increased costs associated with SNAP, Moller said the state and federal government historically split the cost of administering the federally supplied SNAP food assistance benefits. The new federal law requires the state to pick up 75% of administrative costs and, in 2027, assume a share of the benefit costs, an amount corresponding to the state’s “error rate” in making its calculations.
“So, in the budget that the governor just put out, there is an extra $42 million in there to pay extra administrative costs for the SNAP program,” Moller said.
Louisiana might owe “an extra $95 million a year from now just to keep the same level of benefits,” he said.
“When we're paying $100 (million) or $150 million more to administer the SNAP program, that's money that can't pay for teacher pay raises,” Moller said. “That's money that can't pay for early childhood education or any other priorities. … Even if we reduce the amount of people who get SNAP assistance or Medicaid assistance, it's not making anybody healthier and it's not making anybody less hungry.”
The state Legislature voted to raise the hospital assessment tax rates in 2025. This would draw down more federal dollars to be directed to hospitals for issues heavily impacting Louisiana, such as infant mortality and drug treatment services. It would also increase reimbursement rates for doctors treating Medicaid patients up to 85% of the total cost.
Because of the changes to Medicaid brought on by the federal government, there are concerns about the state’s ability to continue these tax rates.
The growing cost of SNAP administration is raising concerns among state leaders about competing priorities within the state budget.
Despite these impending costs, the Louisiana governor provided a different take on the state’s economic state in his opening message of the 2026-27 budget proposal.
Gov. Jeff Landry stated that during his term, Louisiana has had the largest tax cut in its history, allowing residents to keep more of their hard-earned money. He also said new private-sector investments would help expand Louisiana’s economy, increase wages and provide new jobs for current and future residents.
“On top of this progress, I recently announced that my ongoing efforts for fiscal accountability and program improvements have resulted in our ability to do more for the people of Louisiana without spikes in spending,” Landry said.
Tighter spending in some areas, including cuts in Medicaid recipients, along with additional economic growth could possibly ease the projected budget shortfalls.
Other expense items up for debate include the governor’s call to increase funding for corrections services by about $82 million next year as Louisiana’s prison population is set to rise.
In 2024, the Legislature voted on a bill that eliminated parole and probation for people convicted of crimes committed after Aug. 1, 2024. This has led to more people staying in jail for longer than anticipated, contributing to this increase in the prison population as more people are convicted of crimes.
“There’s a cost associated with that,” Moller said. “That $82 million is going to continue to grow because every year, in the out years, our prison population is going to continue to grow.”
Moller also said expanding funding for private school savings accounts–Landry’s LA Gator program–will be debated during the legislative session, which will run from March 9 to June 1.
The Legislature granted Landry $43.5 million to fund the program, but requests for additional funding continue to arise, diverting funds from other areas.
“Public school teachers haven’t gotten a permanent raise for three years,” Moller said. “This was the fourth year in a row.”
