Louisiana House Bill HB86

Louisiana 2016 1st Special Session

• Introduced: 2/18/16
• Refer: 2/18/16
• Report Pass: 2/23/16
• Engrossed: 2/25/16
• Refer: 3/4/16

Caption

Establishes the Revenue Stabilization Trust Fund (Item #7) (RE SEE FISC NOTE SD RV See Note)

Impact

The bill is expected to significantly affect Louisiana's fiscal framework by creating a dedicated source of funding that can be utilized for critical state projects and obligations. Specifically, the funds can only be appropriated in years where the fund balance exceeds $10 billion, allowing up to 5% of the balance for purposes such as paying down public debt, funding retirement liabilities, and supporting infrastructure projects. This framework aims to enhance financial stability and ensure that mineral wealth directly benefits the state's economy.

Summary

House Bill 86, known as the Revenue Stabilization Trust Fund Act, aims to establish a special treasury trust fund dedicated to stabilizing state revenues derived from mineral production and corporate income. The bill mandates that mineral revenues exceeding $650 million and up to $950 million during the fiscal year will be allocated to this fund, alongside corporate income and franchise tax revenues exceeding $500 million. These measures are designed to secure funds for the state while providing a buffer against fluctuations in revenue due to the cyclic nature of the mineral sector.

Sentiment

The reception of HB 86 has been generally positive among legislators who support the establishment of a revenue stabilization mechanism as a safeguard for future economic downturns. Proponents argue that this initiative not only secures vital resources but also promotes fiscal responsibility in managing state finances. However, there are concerns among some legislators regarding the allocation limitations, which could restrict the immediate use of funds during critical financial periods.

Contention

Despite its perceived advantages, HB 86 does face criticism from those who worry about the long-term implications of tying state budgetary resources to a volatile industry like mineral extraction. Detractors argue that reliance on such revenues may obscure the need for more diversified funding strategies, particularly for essential services in education and healthcare. The debate surrounding the bill exemplifies the ongoing struggle between fiscal stability and the risks associated with dependence on specific revenue sources.