Louisiana State Capitol
Louisiana State Capitol
Tax Reform

Louisiana Governor Wants Higher Taxes

Treasurer: “We don’t have a revenue problem, we have a spending problem.”

In a rare statewide televised address, Louisiana Governor John Bel Edwards insisted higher taxes are needed to solve what he called “a historic fiscal crisis.” The Pelican State must now confront “almost a $1 billion deficit for this year alone and a $2 billion deficit next year,” the governor said Thursday night.

Edwards laid most of the blame on the administration of former Louisiana Governor Bobby Jindal. In a televised response, State Treasurer John Kennedy noted Louisiana’s budget has grown significantly over the last decade – from $16.5 billion to $25 billion. That amounts to a 40 percent increase, while the state’s economy grew by just 25 percent, Kennedy said.

If the state had effective limits on spending, like those found in Colorado’s Taxpayer Bill of Rights, Louisiana would not be contending with a budget shortfall today. As Treasurer Kennedy said Thursday night, “We don’t have a revenue problem, we have a spending problem.”

In fiscal year 2014, Louisiana spent $5,867 for every state resident – slightly above the national average of $5,457. Neighboring Gulf states Alabama, Texas and Florida all spent less per person. Meanwhile, roughly 42 percent of Louisiana’s budget was covered by federal aid – the second-highest level in the nation.

At $371, the state’s per capita Medicaid expenditures far exceed those of Alabama ($139) or Mississippi ($159). Similarly, Louisiana spends more per capita on its correctional system than other Gulf States – and 55 percent more than Alabama.

According to the most recent U.S. Census Bureau figures, Louisiana spent $10,490 per K-12 student – more than any state in the Gulf region. Alabama, by contrast, spends only $8,755 per student; Mississippi spends even less at $8,130. Furthermore, analysis from the Cato Institute finds virtually no link between educational funding levels and student achievement.

Louisiana’s state and local sales tax burden is already the nation’s third heaviest. Raising sales and other taxes, as Governor Edwards proposed Thursday night, would only further erode Louisiana’s economic competitiveness, which currently stands at 26th in the union, according to the latest edition of Rich States, Poor States. Rather than saddling households with even higher taxes, Louisiana government should learn to live within its means.

In Depth: Tax Reform

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish. A…

+ Tax Reform In Depth