Louisiana at the CrossroadsResponsible Responses to Louisiana’s Financial Crisis

1

WWW.LABUDGET.ORG

           

FIVE YEAR BASE LINE PROJECTIONSTATE GENERAL FUND SUMMARY

APPROPRIATED   

             Prior Current Projected Projected Projected   Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal YearREVENUES: 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014           Taxes, Licenses & Fees $8,998,200,000 $9,452,400,000 $9,943,900,000 $10,380,600,000 $10,799,700,000 Less Dedications ($1,715,700,000) ($1,733,500,000) ($1,745,400,000) ($1,789,700,000) ($1,835,700,000)Carry Forward Balances $34,334,172 $13,357,293 $0 $0 $0 Act 51 of 2010 RLS Transfer from Budget Stabilization Fund $198,396,069 $0 $0 $0 $0 Act 633 of 2010 RLS Transfer Fund Balances $78,905,388 $0 $0 $0 $0 Act 633 of 2010 RLS Transfer from Incentive Fund $0 $3,950,000 $0 $0 $0 Act 226 Transfer from Incentive Fund $3,900,000   $0 $0 $0

Act 122 Transfer from Budget Stabilization Fund "Rainy Day Fund" $86,177,032 $0 $0 $0 $0 Act 226 Transfer from Insure LA Incentive Fund $75,587,322 $0 $0 $0 $0 Act 226 Transfer from Rapid Response Fund $13,500,000 $0 $0 $0 $0 Use of FY 07-08 Surplus $782,290,000 $0 $0 $0 $0            TOTAL REVENUES $8,555,589,983 $7,736,207,293 $8,198,500,000 $8,590,900,000 $8,964,000,000            ANNUAL GROWTH RATE   -9.58% 5.98% 4.79% 4.34%           EXPENDITURES:          General Appropriation Bill $7,616,656,503 $7,106,616,195 $9,024,410,685 $9,451,493,804 $9,713,701,452 Ancillary Appropriation Bill $0 $754,500 $26,968,957 $55,254,179 $83,994,074 Non-Appropriated Requirements $433,349,119 $426,991,041 $432,276,362 $432,276,362 $432,276,362 Judicial Appropriation Bill $132,362,434 $134,362,434 $134,238,278 $134,239,742 $134,241,207 Legislative Appropriation Bill $69,312,744 $67,383,123 $67,416,279 $67,420,302 $67,424,057 Special Acts $0 $0 $33,709,982 $33,709,982 $33,709,982 Capital Outlay Bill $794,318,000 $0 $10,000,000 $10,000,000 $10,000,000 27th Pay Period occurring in FY 2011-2012 $0 $0 $70,946,489 $0 $0            TOTAL EXPENDITURES $9,045,998,800 $7,736,107,293 $9,799,967,032 $10,184,394,371 $10,475,347,134            ANNUAL GROWTH RATE   -14.48% 26.68% 3.92% 2.86%           Midyear Adjustments after 12/1/2009 ($490,408,817) $0 $0 $0 $0            PROJECTED BALANCE $0 $100,000 ($1,601,467,032) ($1,593,494,371) ($1,511,347,134)

           

Oil Price Forecast $71.43 $72.43 $76.50 $77.18 $78.78

           

FIVE YEAR BASE LINE PROJECTIONSTATE GENERAL FUND SUMMARY

APPROPRIATED              

  Prior Current Projected Projected Projected   Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal YearREVENUES: 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014           Taxes, Licenses & Fees $8,998,200,000 $9,452,400,000 $9,943,900,000 $10,380,600,000 $10,799,700,000 Less Dedications ($1,715,700,000) ($1,733,500,000) ($1,745,400,000) ($1,789,700,000) ($1,835,700,000)Carry Forward Balances $34,334,172 $13,357,293 $0 $0 $0

Act 51 of 2010 RLS Transfer from Budget Stabilization Fund $198,396,069 $0 $0 $0 $0 Act 633 of 2010 RLS Transfer Fund Balances $78,905,388 $0 $0 $0 $0 Act 633 of 2010 RLS Transfer from Incentive Fund $0 $3,950,000 $0 $0 $0 Act 226 Transfer from Incentive Fund $3,900,000   $0 $0 $0

Act 122 Transfer from Budget Stabilization Fund "Rainy Day Fund" $86,177,032 $0 $0 $0 $0 Act 226 Transfer from Insure LA Incentive Fund $75,587,322 $0 $0 $0 $0 Act 226 Transfer from Rapid Response Fund $13,500,000 $0 $0 $0 $0 Use of FY 07-08 Surplus $782,290,000 $0 $0 $0 $0            TOTAL REVENUES $8,555,589,983 $7,736,207,293 $8,198,500,000 $8,590,900,000 $8,964,000,000            ANNUAL GROWTH RATE   -9.58% 5.98% 4.79% 4.34%           EXPENDITURES:          General Appropriation Bill $7,616,656,503 $7,106,616,195 $9,024,410,685 $9,451,493,804 $9,713,701,452 Ancillary Appropriation Bill $0 $754,500 $26,968,957 $55,254,179 $83,994,074 Non-Appropriated Requirements $433,349,119 $426,991,041 $432,276,362 $432,276,362 $432,276,362 Judicial Appropriation Bill $132,362,434 $134,362,434 $134,238,278 $134,239,742 $134,241,207 Legislative Appropriation Bill $69,312,744 $67,383,123 $67,416,279 $67,420,302 $67,424,057 Special Acts $0 $0 $33,709,982 $33,709,982 $33,709,982 Capital Outlay Bill $794,318,000 $0 $10,000,000 $10,000,000 $10,000,000 27th Pay Period occurring in FY 2011-2012 $0 $0 $70,946,489 $0 $0            TOTAL EXPENDITURES $9,045,998,800 $7,736,107,293 $9,799,967,032 $10,184,394,371 $10,475,347,134            ANNUAL GROWTH RATE   -14.48% 26.68% 3.92% 2.86%           Midyear Adjustments after 12/1/2009 ($490,408,817) $0 $0 $0 $0            PROJECTED BALANCE $0 $100,000 ($1,601,467,032) ($1,593,494,371) ($1,511,347,134)           

Oil Price Forecast $71.43 $72.43 $76.50 $77.18 $78.78

(in millions) December April June

FY2010 $7,863 $7,544 $7,282

FY2011 $8,021 $7,776 $7,719

REC Forecast Change December to June

4

5

45%

18%

7%

30%

FY11 Total Means of Financing

Fed funds: $11.5BDedications: $4.6BAgency fees: $1.7BGeneral fund: $7.7B

$1.6 billion ÷ $25.5 billion = 6%

Percent of Total Budget

6

FY12 Projected Shortfall Total FY11 BudgetPercent of total FY11 budget to

be cut over 3 years

$1.6 billion ÷ $7.7 billion = 21%

Percent of State General Fund Spending

7

FY12 Projected Shortfall FY11 State General FundPercent of FY11

state general fund to be cut in FY12

8

34%

66%

State General FundDiscretionary Non-discretionary

$1.6 billion ÷ $2.6 billion = 62%

Percent of Discretionary Spending

9

FY12 Projected ShortfallPercent of FY11

discretionary fund to be cut in FY12

FY11 Discretionary Funds

10

29%

37%

34%

Discretionary Budget

HealthcareHigher edAll other

FY05 FY06 FY07 FY08 FY09 FY10 FY11 $- $5,000,000,000

$10,000,000,000 $15,000,000,000 $20,000,000,000 $25,000,000,000 $30,000,000,000 $35,000,000,000

Total State BudgetTotal State Budget Less Hurricane Disaster Recovery FundingState General Fund

Spending Reverts to Pre-Katrina Levels (in 2009 dollars)

11

Community & Technical Colleges

Food Stamps

LACHIP

Medicaid

State General Fund Revenue

0% 10% 20% 30% 40%

37%

20%

16%

13%

2%

Increases Since Pre-KatrinaFY05-FY10

12

(in millions) FY08 FY09 FY10 FY11 FY12 5-Year Total

Excess Itemized Deductions $152 $250 $255 $260 $265 $1,182

Bracket Changes N/A N/A $359 $251 $262 $872

Total Cost $152 $250 $614 $511 $527 $2,054Source:Department of Revenue for Excess Itemized Deductions, except FY12, which is LBP estimateLegislative Fiscal Office for Bracket Changes

Fiscal Effect of Stelly Repeals

13

Oct. 2007 Oct. 2008 Oct. 2009 Oct. 2010 Jan. 20110.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

72.0% 71.3% 67.7% 63.2% 63.2%

8.7% 12.3% 16.8%

Original FMAP Stimulus

80.0% 80.0% 80.0%

FMAP Rate Change

14

$7.1 BILLION

5-Year Tax Exemption Budget

15

State general fund revenues: $7.7 billion Cost of tax exemptions: $7.1 billion

Tax code spending equals 92% of SGF revenues

FY 2011 Budget Projections

16

Insurance Premium Tax Credit

Motion Picture Investor Credit

Income shifting by multistate corporations

Paying companies to send their sales taxes on time

Enterprise zone credit

Horizontal drilling exemption

What Louisiana’s Tax Policies Cost

17

$195 million

$119 million

$32 million

$34 million

$23 million

$15 million

Example:Of 179 sales tax exemptions, 90 are lumped under “Other Exemptions” at a cost of $3.8 billion of $4.7 billion or 80%

Tax Exemption Budget Needs More Transparency

18

State & Local Taxes in 2007

19

20

Governors that Supported Tax Increases by PartyRepublican 55%Democrat 75%

21

The budget is “devastating” Suspending tax exemptions is “something we should debate”

Senate President Joel ChaissonBaton Rouge Business Report

September 24, 2010

1. We need a balanced, transparent approach to solving Louisiana’s fiscal crisis.

2. Fiscal crisis is due in part to the global recession but is also of our own making.

3. Spending is not the problem.4. We need RESPONSIBLE revenue

measures, spending measures, and COMMON SENSE savings.

5. Revenue measures must be thoughtful, adequate, sustainable, and fair.

Better Choices for a Better Louisiana

22

WWW.LABUDGET.ORG

23