(The Center Square) − Louisiana’s Budget Stabilization Fund — commonly known as the “rainy day fund” — has climbed to a record nearly $1.4 billion after another year of surplus revenue and investment earnings.
The Revenue Estimating Conference certified the fund’s balance Monday as part of its annual review. The conference is responsible for officially recognizing the balance under state law.
The fund now holds roughly $1.393 billion, including about $167 million in recent deposits.
The largest piece — roughly $144 million — came from Louisiana’s fiscal year 2025 surplus. State budget documents show Louisiana ended that fiscal year with a $577.1 million general fund surplus, meaning the state collected more money than it ultimately spent or otherwise obligated.
Louisiana law requires at least 25% of revenue officially classified as nonrecurring to be deposited into the Budget Stabilization Fund. In this case, that translated into roughly $144 million from the surplus.
Another approximately $23 million came from investment earnings generated by the fund itself.
The latest deposits continue a yearslong buildup of Louisiana’s reserves following a string of budget surpluses. The state recorded a $595 million surplus in fiscal year 2024, its eighth consecutive year with a surplus, according to the state's annual financial report.
The rainy day fund is designed primarily to cushion the state against revenue downturns and budget deficits. Louisiana law tightly restricts when the money can be withdrawn, including when the Revenue Estimating Conference lowers its forecast and creates a projected budget shortfall.
Growing the fund can also strengthen the state’s financial position when borrowing money. Credit-rating agencies consider reserves and other fiscal cushions when evaluating states, which can ultimately affect the interest rates governments pay when issuing bonds.
A 2024 Louisiana Legislative Auditor analysis found that the state already had substantial reserves before the latest increase. At the time, the auditor said Louisiana's two major reserve accounts — the Budget Stabilization Fund and Revenue Stabilization Trust Fund — held a combined $3.8 billion as of September 2024. The auditor found that was above the largest reserve level implied by major credit-rating agencies’ criteria, which it estimated at about $2.2 billion.
The Budget Stabilization Fund is also approaching a constitutional ceiling. State law generally prohibits deposits that would push the fund above 4% of the previous fiscal year's state revenue receipts, excluding certain disaster-related revenues. The Legislative Auditor calculated that ceiling at about $1.5 billion for fiscal year 2024, although the applicable cap changes annually with state receipts.
That leaves Louisiana substantially closer to the limit than it was only a few years ago.
The growth comes as rainy day reserves nationally have begun to retreat from pandemic-era highs. The Pew Charitable Trusts reported in March that states' median rainy day fund capacity fell in fiscal year 2025 for the first time since the Great Recession, with 26 states seeing declines in the number of days their reserves could finance government operations. Louisiana, however, was among the states reporting a record-high rainy day balance that year.
Louisiana also maintains the separate Revenue Stabilization Trust Fund, created to capture portions of unusually high corporate and mineral tax collections. Unlike the traditional rainy day fund, lawmakers have broader authority under certain circumstances to tap that account for infrastructure or other purposes.