Louisiana state government revenues dropped 7.2% in the first 11 months of the fiscal year compared to a year earlier and has at least one rating agency concerned.
"The year-to-date decline in net revenues is a credit consideration, particularly because it is consistent with lower current year collections and reduced outyear revenue forecasts," said Geoff Buswick, managing director and sector leader for the U.S. Public Finance Sector at S&P Global Ratings. "Louisiana's strong reserves and expected year-end surplus provide near-term flexibility, but continued revenue underperformance could become a credit pressure if it leads to an unresolved structural imbalance."
The decrease was expected and built into the budget, said Eric Kim, senior director for Fitch Ratings. "The scale of those declines appears to be somewhat larger than the state had anticipated, but not to the level that raises immediate rating concerns.
Weak tax collection, mostly individual and corporate income taxes led the state to revise down its general fund forecast by approximately $100 million to $12.4 billion in May, and lowered estimates for 2027 by the same amount, Kim added. "This level of shortfall should be well within the state's ability to manage without too much disruption."
Still, he added, Fitch will monitor the state's revenues and any budgetary actions. "Our current positive outlook and potential rating action hinges on the state's ability to execute a set of complex and substantial tax policy changes while maintaining structural balance," Kim said.
Revenues through May have come in lower than expected, Moody's Ratings Vice President Denise Rappmund said. However, "there is some cushion in the 2026 budget. Still, if the revenue collections continue to be significantly weaker, the state will have to tighten its budget further, which will be challenging since they had already held it flat to accommodate tax changes and slowing economic growth."
Louisiana
"The changes were designed to be revenue neutral," KBRA said in a late March report. The March revenue forecast revised upward major tax revenues by 0.3% for the fiscal year, KBRA said.
Louisiana is rated Aa2 by Moody's, AA by S&P, AA-minus by Fitch and AA by KBRA. Each of the ratings have a stable outlook, except Fitch's,
In a report in late May, S&P cited active budget monitoring and its ability and demonstrated willingness to modify expenditures to maintain structural balance as positives. For negatives, it cited "economic fundamentals that generally trail those of the U.S., including
The press office for Gov. Jeff Landry didn't immediately respond to a request for a comment.
