Executive Summary
Louisiana convened its 2015 legislative session with seemingly insurmountable problems: a $1.6 billion budget shortfall, difficult-to-navigate funding dedications, and a governor who pledged he wouldn’t increase taxes. If that combination seems intractable, it was—the session closed with a patchwork of short-term, temporary fixes to plug the budget hole with promises that legislators would be back the next legislative session to focus on fiscal issues.
Louisiana has reached a fiscal reform crossroads. While the most recent legislative session shows that short-term budget fixes are not tenable, the exercise pushed many to ask the right questions. How can the tax and fiscal system be updated to reflect a changing economy? Why, in the midst of economic expansion, are tax collections failing to meet the state’s needs?
Over the course of five months, our team of tax economists met with stakeholders from all walks of Louisiana life, including small business owners, local government officials, trade associations, industry representatives, state officials across the political spectrum, and ordinary taxpayers. We also reviewed the history of the fiscal system, previous tax reform studies, and historical revenue and economic trends.
The result is this book, which is meant to help Louisiana achieve the goal of true fiscal reform—reform that benefits all taxpayers by addressing the many long-term hurdles the state budget has faced, finally bypassing the need for temporary fixes. It’s meant to start the conversation about what Louisiana does well, but also what it could do better—by recognizing strengths, diagnosing challenges, and prescribing real, workable solutions.
We undertook this project as an independent national organization familiar with tax developments in many states, with the view that tax systems should adhere to sound economic principles. We formulated these recommendations in the spirit of providing useful information and observations for Louisiana policymakers, journalists, and citizens as they evaluate the state’s fiscal system.
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