BusinessReport.com

As Louisiana’s capital city, Baton Rouge has long benefited economically from a thriving public sector that has even cushioned it from harder times.

Economic benefits ripple year round through the area, from the many government workers who live and spend in the area, to lobbyists who serve clients, to purchases of every kind necessary to run the Capitol, says LSU economics professor Jim Richardson. The state’s public sector extends even further to LSU or its health care system.

“We have a certain cushion or buffer zone that protects us,” Richardson says. “Even during the downturn of the 1980s when the state had significant budgetary problems, one of the areas that didn’t have much of a problem was the Baton Rouge area and partly because we’re cushioned by the public sector and other activities.”

Also, the public sector is a more stable employer, which means fewer layoffs—and a cushion for any recession.

In this message prefacing his currently proposed 2008-09 budget, Gov. Bobby Jindal says Louisiana hasn’t yet followed the nation in an economic slowdown, but “it’s important to consider forecasts showing steady revenue declines in coming years.” For 2008-09, Jindal’s proposed budget calls for increasing the state’s economic competitiveness such as through job training and eliminating 3.3 cents in temporary and permanent sales tax on business utilities.

State government is expected to grow this coming fiscal year. Currently, the proposed budget projects $9.34 billion in revenue, compared to $8.74 billion for fiscal year 2007-08 and $9.68 billion in 2006-07. Projected expenditures are $28.19 billion, down from $32.34 billion in 2007-08 and $22.39 billion in 2006-07.

Growth also is expected with the city-parish government, which Mayor-President Kip Holden says is greatly due to the area’s continued economic diversification efforts. Holden points to attracting the film industry, expanding airline service and growing biotech.

According to Holden’s 2008 economic forecast, the projected city-parish budget for 2008 is $678.7 million, up 9.57% from $619.4 million in 2007. The general fund is expected to increase by 9.57%; special revenue, up 14.45%, capital projects, up 46.39%; enterprise, up 2.89%; and internal services, up 18.05%.

This year’s budget also calls for 103 new full-time jobs, up 2.4% from last year.

Government projects that are expected to put millions in the community include Green Light Plan road improvements, security cameras, increased pay by $4.6 million to police and firefighters and better pay to first responders.

Much of this expansion is related to the area’s population growth that resulted from Hurricane Katrina in 2005. An estimated 250,000 people fled to the area initially, while an estimated 35,000 have stayed.

Having incorporated in July 2005, even the developing city of Central has become a new economic contributor this year by approving a $3.5 million, three-year contract with CH2M HILL to provide basic government services. The move will eliminate the need for services from East Baton Rouge Parish and the $3.3 million tab for those services. CH2M also got approval to hire workers, which is creating 17 new jobs.