Cock-a-Doodle-Do in Louisiana


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Earlier this month the Louisiana Budget Project released a report on state income tax cuts that says "Louisiana’s fiscal chickens are coming home to roost." Put in a less entertaining way, Louisiana simply doesn't have enough revenue to meet the needs of Louisianans and this is likely to be the case for many years to come unless lawmakers act quickly.

One reason for the state's woes is the legislation enacted in 2007 and 2008 that repealed important parts of a 2002 tax reform, commonly referred to as the Stelly plan, after its sponsor, Rep. Vic Stelly. The plan eliminated the state sales tax on utilities, food, and medicine and imposed tax increases on the better-off. The package was initially revenue-neutral, but over time it would have created more revenue for the state.

The report finds, "The revenue loss caused by the Stelly rollbacks, coupled with the impact of the national economic downturn and shortfalls in mineral revenues, leave Louisiana with insufficient revenues to maintain services at current levels at a time of growing needs." LANO estimates, with ITEP's help, that if the Stelly provisions hadn't been repealed, the state might not have faced a budget shortfall in 2010.

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