A Washington, D.C.-based think tank has released a comprehensive report on Louisiana’s “fiscal reform crossroads” and its recommendations for fiscal reform.
“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,” reads an executive summary of the report, which was commissioned by the The Committee of 100 for Economic Development, or C100, a private nonprofit organization whose members includes the top CEOs of leading private and public companies in Louisiana and university presidents. “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 has faced, finally bypassing the need for temporary fixes.”
“Louisiana Fiscal Reform: A Framework for the Future” says the state should restructure its tax code to reflect its diversifying economy in order to mitigate volatility in the economy. It also says leaders should consider removing multiple duplicative tax regimes by unifying state and local sales tax collections, tax administration and tax bases under an independent, state-local commission.
And due to the state’s long-term fiscal deficit—the report notes lawmakers scrambled to plug a $1.6 billion budget shortfall during this session and likely will face another budget gap next year—the report says “any changes to the tax code need to address this reality so that the state no longer requires short-term, temporary fixes to plug unexpected budget shortfalls each year.”
To do this, the report says, Louisiana lawmakers at the local and state levels need increased flexibility in raising revenue and cutting costs.
“For example, state legislators are limited by the high level of dedications in the state’s fiscal system, while local officials are hindered as a result of strict state-imposed limitations on raising revenues,” the report says. “These problems and their implications deserve thoughtful deliberations.”
The report also includes multiple recommendations for changing the state’s sales, corporate income, individual income and property tax systems. It also includes potential solutions to the state’s transportation funding and revenue volatility issues.
“If the most robust of our recommendations were adopted, Louisiana’s tax climate would leap from thirty-fifth to tenth best in the country, surpassing Texas on our State Business Tax Climate Index,” says Tax Foundation Director of State Projects Scott Drenkard in a statement. “Louisiana’s tax code is in need of solutions, and we hope our work provides policymakers and taxpayers with the information they need in order to improve the state’s economic competitiveness.”
Read an executive summary of the report, or see the complete 118-page report.
