Government Growth Limit: Louisiana’s Next Step

Originally published at the Pelican Institute.

Louisiana is moving in the right direction. Under Governor Jeff Landry, the state is beginning to deal with years of bad policies that weakened competitiveness, slowed job growth, and made too many families look elsewhere for opportunity. 

That kind of turnaround does not happen overnight. Markets respond to incentives, but they also need time to adjust after years of government growing too much, taxing too much, and crowding out too much private activity.

That is why House Bill 824 by state Representative Beau Beaullieu, which establishes a Government Growth Limit, is an important next step. 

The bill rightly focuses on the real issue: Louisiana cannot tax-cut its way to prosperity unless it also controls spending.  

Louisiana has already made progress. The move to a flatter, lower income tax rate was a major improvement because it reduced penalties on work, investment, and entrepreneurship. Some recent budget restraint has also helped. But these reforms are only the start. More must be done to reduce the size and scope of government so the private sector can lead.

That is where the Government Growth Limit fits.

UnderHB 824, the Revenue Estimating Conference would establish a Government Growth Limit each year. The formula uses Louisiana population growth plus an inflation measure based on the chained CPI and medical care inflation, averaged over five years. The bill applies this limit to recurring State General Fund spending and links excess recurring revenue to the Louisiana Income Tax Elimination Fund.  

That connection is key. Spending restraint is not just about balancing a budget. It is about creating room to reduce tax rates. When government grows slower than tax revenue, excess money should not automatically fund more programs. It should be used to lower tax rates, remove barriers to economic activity, and help families keep more of what they earn.

New data from the Americans for Tax Reform’s Sustainable Budget Project show both progress and warning signs. Louisiana’s state funds budget grew slower than population growth plus inflation over the last decade, meaning the state spent $5.4 billion less than it otherwise could have. That is encouraging. 

But all funds (state and federal funds) spending grew far faster, with the 2025 all funds budget $13.8 billion above the population-plus-inflation benchmark and cumulative excess spending of $55.8 billion from 2016 to 2025.  

That matters because government growth rarely stays contained. If spending is limited in one place but shifts elsewhere, taxpayers still pay. A strong Government Growth Limit should help create a culture of discipline across the budget, not just a temporary accounting exercise.

Louisiana needs this discipline because the economy still has too little momentum. The latestBLS labor market data show Louisiana had 2,000,900 nonfarm jobs in February 2026, down 1,600 jobs from a year earlier. Meanwhile, nearby and competing states like Texas, Arkansas, Alabama, and South Carolina added jobs over the same period.  

That is not just a data point. It means fewer opportunities for workers, fewer customers for small businesses, and more pressure on families deciding whether to stay in Louisiana or move to states with better prospects.

The answer is not another government program. The answer is better incentives.

The private sector is much better at providing what people need and want because it must respond to real demand. If people value a product or service, businesses expand. If they do not, resources move elsewhere. Government does not face that same discipline, which is why its growth should be limited, focused, and transparent.

This is not radical. States such as North Carolina, South Carolina, and Iowa are showing that spending restraint and tax reform can work together. When states control spending and reduce tax burdens, they become more attractive places to live, work, invest, and raise a family.

Louisiana should follow that path.

The question is not whether Louisiana can afford lower taxes. The question is whether Louisiana can afford to keep falling behind while other states compete more aggressively for people, jobs, and capital.
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The Government Growth Limit is not the final reform. But it is a strong step toward the right goal: control spending, reduce tax rates, and remove barriers to growth.