Examining Louisiana’s Hidden Budget

Examining Louisiana’s Hidden Budget

A letter by Steve Monaghan, president of the Louisiana Federation of Teachers (LFT), published in the February 11, 2011 edition of The Advocate highlighted a growing awareness of Louisiana’s “hidden budget” of tax exemptions. Over 440 exemptions cost our state $7.1 billion each year – about the same amount of revenue generated through taxes.

The grassroots movement, Better Choices for a Better Louisiana (BCBL), has called for a moratorium on new tax exemptions along with an open and thoughtful process of examining these exemptions. Better Choices put those requests in letters the coalition delivered to House Speaker Jim Tucker and Senate President Joel Chaisson last year following the public launch of BCBL. LFT and the Louisiana Budget Project are founding members of Better Choices for a Better Louisiana. The fact that these government leaders, along with others, are now beginning to openly discuss this problem is vitally important to addressing the $1.6 billion budget shortfall Louisiana faces in the upcoming fiscal year.

Tax exemptions, also known as “tax expenditures,” are expenditures of state monies on things like film subsidies, natural gas drilling incentives, or poverty-reducing tax credits. This is Louisiana’s $7.1 billion “hidden budget,” as contrasted with the regular $7.7 billion budget that goes through the legislative process every year. (For more information on Louisiana’s hidden budget, see LBP’s report Louisiana’s Hidden State Budget.) Many of these tax expenditures are outdated and benefit a select few companies or industries, costing the state millions that could be better spent on roads, schools, and improved health care.

The current fiscal crisis should encourage both citizens and lawmakers to seriously look at tax exemptions for how—and whether—they serve the public interest. Louisiana’s “hidden budget” needs increased public oversight in allocating these state resources.