Louisiana at the Crossroads Responsible Responses to Louisiana’s Financial Crisis WWW.LABUDGET.ORG

FIVE YEAR BASE LINE PROJECTION STATE GENERAL FUND SUMMARY   FIVE YEAR BASE LINE PROJECTION STATE GENERAL FUND SUMMARY APPROPRIATED Prior Current Projected Fiscal Year REVENUES: 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 Act 51 of 2010 RLS Transfer from Budget Stabilization Fund $198,396,069 Act 633 of 2010 RLS Transfer Fund Balances $78,905,388 Act 633 of 2010 RLS Transfer from Incentive Fund $3,950,000 Act 226 Transfer from Incentive Fund $3,900,000 Act 122 Transfer from Budget Stabilization Fund "Rainy Day Fund" $86,177,032 Act 226 Transfer from Insure LA Incentive Fund $75,587,322 Act 226 Transfer from Rapid Response Fund $13,500,000 Use of FY 07-08 Surplus $782,290,000 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 $754,500 $26,968,957 $55,254,179 $83,994,074 Non-Appropriated Requirements $433,349,119 $426,991,041 $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 $33,709,982 Capital Outlay Bill $794,318,000 $10,000,000 27th Pay Period occurring in FY 2011-2012 $70,946,489 TOTAL EXPENDITURES $9,045,998,800 $7,736,107,293 $9,799,967,032 $10,184,394,371 $10,475,347,134 -14.48% 26.68% 3.92% 2.86% Midyear Adjustments after 12/1/2009 ($490,408,817) PROJECTED BALANCE $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 PROJECTION STATE GENERAL FUND SUMMARY   FIVE YEAR BASE LINE PROJECTION STATE GENERAL FUND SUMMARY APPROPRIATED Prior Current Projected Fiscal Year REVENUES: 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 Act 51 of 2010 RLS Transfer from Budget Stabilization Fund $198,396,069 Act 633 of 2010 RLS Transfer Fund Balances $78,905,388 Act 633 of 2010 RLS Transfer from Incentive Fund $3,950,000 Act 226 Transfer from Incentive Fund $3,900,000 Act 122 Transfer from Budget Stabilization Fund "Rainy Day Fund" $86,177,032 Act 226 Transfer from Insure LA Incentive Fund $75,587,322 Act 226 Transfer from Rapid Response Fund $13,500,000 Use of FY 07-08 Surplus $782,290,000 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 $754,500 $26,968,957 $55,254,179 $83,994,074 Non-Appropriated Requirements $433,349,119 $426,991,041 $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 $33,709,982 Capital Outlay Bill $794,318,000 $10,000,000 27th Pay Period occurring in FY 2011-2012 $70,946,489 TOTAL EXPENDITURES $9,045,998,800 $7,736,107,293 $9,799,967,032 $10,184,394,371 $10,475,347,134 -14.48% 26.68% 3.92% 2.86% Midyear Adjustments after 12/1/2009 ($490,408,817) PROJECTED BALANCE $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

REC Forecast Change December to June (in millions) December April June FY2010 $7,863 $7,544 $7,282 FY2011 $8,021 $7,776 $7,719

Percent of Total Budget $1.6 billion ÷ $25.5 billion = 6% FY12 Projected Shortfall Total FY11 Budget Percent of total FY11 budget to be cut over 3 years

Percent of State General Fund Spending $1.6 billion ÷ $7.7 billion = 21% FY12 Projected Shortfall FY11 State General Fund Percent of FY11 state general fund to be cut in FY12

Percent of Discretionary Spending $1.6 billion ÷ $2.6 billion = 62% FY12 Projected Shortfall FY11 Discretionary Funds Percent of FY11 discretionary fund to be cut in FY12

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

Increases Since Pre-Katrina FY05-FY10

Fiscal Effect of Stelly Repeals (in millions) FY08 FY09 FY10 FY11 FY12 5-Year Total Excess Itemized Deductions $152 $250 $255 $260 $265 $1,182 Bracket Changes N/A $359 $251 $262 $872 Total Cost $614 $511 $527 $2,054 Source: Department of Revenue for Excess Itemized Deductions, except FY12, which is LBP estimate Legislative Fiscal Office for Bracket Changes

FMAP Rate Change

5-Year Tax Exemption Budget $7.1 BILLION

FY 2011 Budget Projections State general fund revenues: $7.7 billion Cost of tax exemptions: $7.1 billion Tax code spending equals 92% of SGF revenues

What Louisiana’s Tax Policies Cost 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 $195 million $119 million $32 million $34 million $23 million $15 million

Tax Exemption Budget Needs More Transparency 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%

State & Local Taxes in 2007

Governors that Supported Tax Increases by Party Republican 55% Democrat 75%

The budget is “devastating” Suspending tax exemptions is “something we should debate” Senate President Joel Chaisson Baton Rouge Business Report September 24, 2010

Better Choices for a Better Louisiana We need a balanced, transparent approach to solving Louisiana’s fiscal crisis. Fiscal crisis is due in part to the global recession but is also of our own making. Spending is not the problem. We need RESPONSIBLE revenue measures, spending measures, and COMMON SENSE savings. Revenue measures must be thoughtful, adequate, sustainable, and fair.

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