Better Choices for a Better LouisianaResponsible Responses to Louisiana’s Financial Crisis

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$1.6 billion ÷ $25.5 billion = 6%

Percent of Total Budget

FY12 Projected Shortfall Total FY11 BudgetPercent of total FY11 budget to

be cut over 3 years

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$1.6 billion ÷ $7.7 billion = 21%

Percent of State General Fund Spending

FY12 Projected Shortfall FY11 State General FundPercent of FY11

state general fund to be cut in FY12

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$1.6 billion ÷ $2.6 billion = 62%

Percent of Discretionary Spending

FY12 Projected ShortfallPercent of FY11

discretionary fund to be cut in FY12

FY11 Discretionary Funds

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

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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

Increases Since Pre-KatrinaFY05-FY10

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Community & Technical Colleges

Food Stamps

LACHIP

Medicaid

State General Fund Revenue

0% 10% 20% 30% 40%

37%

20%

16%

13%

2%

(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

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$7.1 BILLION

5-Year Tax Exemption Budget

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

Tax code spending equals 92% of SGF revenues

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FY 2011 Budget Projections

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

Examples of What Louisiana’s Tax Policies Cost

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$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%

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Tax Exemption Budget Needs More Transparency

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

Senate President Joel ChaissonBaton Rouge Business Report

September 24, 2010

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