Louisiana Fiscal Reform: A Framework For the Future

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 in the next legislative session to focus on fiscal issues.

Tax reform economists met with stakeholders from Louisiana including small business owners, local government officials, trade associations, industry representatives, state officials across the political spectrum and ordinary taxpayers. During their meetings, several themes arose: Louisiana needs a tax structure that mitigates the volatility of the economy and current fiscal system, providing revenues that grow with the economy. The Louisiana fiscal system faces a long term structural deficit. 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. Louisiana’s fiscal system desperately needs administrative improvement. Most of the state’s taxes suffer from narrow bases. And above all, the tax system should retain elements that ensure Louisiana improves its competitiveness in both the national and global arena.

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