Louisiana at the Crossroads:Responsible Responses to Louisiana’s Financial Crisis

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46 States Face FY11 Budget Shortfalls

(in millions) FY09 FY10 FY11 FY12State General Fund Revenue $9,490 $8,532 $7,776 $8,199State General Fund Expenditure $9,475 $9,046 $9,163 $10,522Adjustments $15 $53 $104 $104Cumulative Balance $0 ($567) ($1,491) ($2,427)

4-Year Base Line Projection

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(in millions) REC – 12/17/2009 REC – 4/14/2010 +/(-)Sales $2,559 $2,456 ($102)Individual Income $2,593 $2,467 ($126)Corporate $442 $392 ($50)Mineral $1,243 $1,113 ($130)Gaming $395 $390 ($5)Other $631 $726 $94Total $7,863 $7,544 ($319)

REC Forecast Change for FY10

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(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

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$2.4 billion ÷ $29 billion = 8%

Percent of Total Budget

3-year Cumulative Shortfall Total FY10 BudgetPercent of total FY10 budget to

be cut over 3 years

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FY10 Total Means of Financing

Federal51%

General Fund31%

Statutory Ded-ications

13%

Self-Generated5%

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$2.4 billion ÷ $9 billion = 27%

Percent of State General Fund Spending

3-year Cumulative Shortfall FY10 State General Fund Percent of FY10

state general fund to be cut over 3

years

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Discretionary vs. Non-Discretionary

Discretionary45%

Non- Discre-tionary

55%

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$2.4 billion ÷ $3.3 billion = 73%

Percent of Recurring Discretionary Spending

3-year Cumulative ShortfallPercent of FY10

recurring discretionary fund to be cut over 3 years

FY10 Discretionary Funds (minus one-time funds for

Capital Outlay)

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FY10 Discretionary Expenditures

Human Resources

35%Education

35%

General Government

4%Public Safety

4%Business & Infrastructure21%

Environment & Natural Re-

sources1%

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FMAP Rate Change

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%

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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: $7.8 billion Cost of tax exemptions: $7.1 billion

Tax code spending equals 91.6% of SGF revenues

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FY 2011 Budget Projections

2006 2011 % Increase

Number 364 441 21%

Cost $5.6 Billion $7.1 Billion 28%

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Growth of Tax Exemptions2006-2011

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%

Example:Lack of assessment of each tax expenditure

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Tax Exemption Budget Needs More Transparency

Improved Tax Collections

$234 million – Delinquent taxes

recovered in the 2009 tax amnesty program

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State & Local Taxes in 2007

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

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