(Constitutional Amendment) Limits the amount of state general fund that may be appropriated in a fiscal year (OR SEE FISC NOTE GF EX)

HB 646 proposes a constitutional amendment that establishes a new Government Growth Limit on recurring state general fund appropriations beginning in fiscal year 2027-2028. The amendment modifies Article VII, Sections 10(C) and (E) and 11(A) of the Louisiana Constitution by creating a dual-limit system that operates alongside the existing expenditure limit. Under the proposed amendment, the Revenue Estimating Conference must establish the Government Growth Limit by the first quarter of each calendar year for the ensuing fiscal year, and the legislature must enact procedures by law to calculate and apply this limit. Recurring revenue amounts that exceed the Government Growth Limit but remain below the expenditure limit may be appropriated only for nonrecurring expenses, defined as expenses not of a continuing or recurring character and not expected to recur in approximately the same amounts each year. The amendment also permits the legislature to change the Government Growth Limit by a two-thirds favorable vote of both houses, but only if each growth factor for the three immediately preceding fiscal years was two and one-half percent or less, and any such change must be approved through a specific legislative instrument that clearly states the intent to modify the limit.

The practical effect of this amendment is to constrain the growth of recurring state general fund spending with a more restrictive mechanism than currently exists under the expenditure limit. For fiscal year 2027-2028, the initial Government Growth Limit will be set at the prior year's recurring expenditures from the State General Fund (Direct) plus three percent, with the Commissioner of Administration required to calculate this amount and submit it to the Joint Legislative Committee on the Budget by January 31, 2027. The Governor's proposed budget for each fiscal year must comply with the Government Growth Limit, and legislators will face restrictions on appropriating recurring revenues above the limit for any purpose other than nonrecurring expenses. This mechanism affects legislative budgeting practices, agency budget requests, and the availability of recurring funds for ongoing state programs and services. Severance and royalty payments allocated under Article VII, Section 4, Paragraphs (D) and (E), are exempted from all provisions of the amendment.

The amendment operates within Louisiana's existing constitutional framework for state finances established in Article VII and preserves the current expenditure limit system while adding a new constraint specifically on recurring appropriations. The amendment is conditioned on voter approval at the statewide election scheduled for November 3, 2026, as required by Louisiana's constitutional amendment procedures. The existing requirement that appropriations from the state general fund not exceed the official forecast remains unchanged, but all appropriations of recurring revenue from the State General Fund (Direct) must now also comply with the Government Growth Limit provisions. This creates a hierarchical structure where recurring revenues are subject to the more restrictive of either the Government Growth Limit or the existing expenditure limit, while the official forecast serves as an absolute cap on total appropriations. The amendment recognizes legislative flexibility through the two-thirds override provision and the authority to establish exceptions by law, allowing for adjustments during periods of low economic growth or compelling circumstances.