Business Tax Repeals
• Business Utility Sales Tax Exemption
fully restored July 1, 2009
• Manufacturing Machinery and Equipment
State Sales Tax Exclusion fully phased-In
July 1, 2009
• Corporate Franchise Tax on long-term debt
will be fully phased-out January 1, 2011
(exclusion is currently at 70%)
Fiscal Update: Overview
• FY 09-10 (current year) – $28.6 billion budget /
mid-year cut of $248M
• Federal Stimulus – $943M used to balance
current budget (add’l federal stimulus funds
still available for use in FY 10-11)
• Rainy Day Fund – $86.5M used to balance
the current budget
• 2009 Amnesty – over $450M collected so
far … (estimated to bring in about $150M)
Fiscal Update: Overview
• FY 11 – projected $1B shortfall (―non-tax‖ session)
Medicaid match – $450M cost increase
Annual increases/cost adjustments
Total State Funds = $9.75B
(projected increase of $160M from FY 10)
• FY 12 – projected $1.7B shortfall
Federal stimulus runs out
Medicaid match – annualized $900M
Total State Funds = $9.97B
(projected increase of $220M from FY 11)
Administration Proposed FY 10-11 Budget
Shortfall Strategy: Use $76M of FY09
surplus and $234M from Amnesty
Program (total $310M in one-time funds),
to pay down debt in FY10, thereby
reducing state debt service by $310M in
FY11 – the funds made available from the
―swap‖ will be budgeted to DHH, and with
federal match, generate up to $1.1B
Revenue Estimating Conference
May 2005 to Dec 2009
May-05 Oct.-05 Feb.-06 May-06 May-07 May-08 May-09 Dec.-09 FY 11 FY 12
Total Taxes, Licenses and Fees 7
CPI vs. Actual
Total State Spending
Source: House Speaker Jim Tucker—2010 LABI Annual Meeting.
Streamline Commission Reforms
The Commission proposed 238 recommendations.
Many of the administrative recommendations were
adopted by state agencies and incorporated in the
Admin. Budget. A few of the reform items highlighted
in the Admin. Budget, include:
• Major reorganization of the Department of Social
Services to consolidate 4 offices into one, while
pursuing departmental modernization initiatives
• Louisiana Veterans Home will partner with
• Elimination of programs, including in DOTD,
DPS, and LED
Public Sector Employment Summary
(excludes state hospitals)
Calculated LA FTE Employment at Southern Average 56,752
Actual LA 2007 FTE Employment 70,720
Change in LA FTE State Employment (if at Southern Average) (13,968)
LA Revised Payroll (approximately $50M per month)* ($600,000,000)
* Payroll is paid from all funds – SGF, Federal, Self
Generated and Statutory Dedicated funds
Source: House Speaker Jim Tucker—2010 LABI Annual Meeting.
Louisiana Unemployment Rate
December 2009 7.5%
November 2009 6.7% 2.0%
December 2008 5.5%
(December 2009 Southern Avg = 9.6%)
Source: USDOL Bureau of Labor Statistics
Taxpayer Protection Issues
Right to Independent Appeal:
• Taxpayers (TPs) should have the same right to
an independent appeal in local sales tax cases
as is afforded TPs in state cases (BTA).
• The practice of issuing ―arbitrary‖ assessments
needs to be addressed (whereby TPs are issued a
final assessment b/c they would not agree to
extension of the 3-yr audit period that is expiring).
Private Contract Auditor Program (local sales tax):
• There need to be standards for auditors’ educational
and professional experience and stronger
protections for taxpayer confidentiality and records.
Attorney Fees (local sales tax cases):
• LA law limits the award of attorney fees to
only tax collectors – TPs are not awarded
attorney fees when they win. TPs must be
treated fairly in the awarding of attorney fees.
UTC Enforcement Mechanism:
• Uniform Local Sales Tax Code (UTC) needs an
enforcement mechanism – a statewide entity
with the authority to address taxpayer issues
in one forum (goal is consistent interpretation
and application of substantive and procedural
laws among all 64 parishes).
How Much of the Atmosphere
Is Greenhouse Gases?
Source: National Center for Policy Analysis 16
What Are the Greenhouse Gases
in the Atmosphere
Source: National Center for Policy Analysis
Where Do CO2 Emissions Come From?
Source: National Center for Policy Analysis 18
What Is the Human Share
of the Greenhouse Effect?
Humanity is responsible for about one-quarter of 1 percent of the greenhouse effect.
Source: National Center for Policy Analysis 19
Waxman-Markey & Boxer
Greenhouse Gas Bills
• Reduce GHG Emissions to 17%
Below 2005 levels by 2020
• Reduce GHG Emissions to 42%
Below 2005 levels by 2030
• Reduce GHG Emissions to 83%
Below 2005 levels by 2050
Economic Impact of
Waxman-Markey on Louisiana
• Job Losses by 2030 26,066 to 35,500
• Decreased Disposable
Household Income by 2030 $485 to $874
• Higher Cost of Gasoline by 2030 20% to 26%
• Higher Cost of Electricity by 2030 54%
• Higher Cost of Natural Gas by 2030 77%
Source: National Association of Manufacturers 21
Cap and Trade/Climate Change
• Congress isn’t jumping through hoops
to pass this.
• Public opinion surveys rank this issue
dead last among voter’s concerns.
• The public understands it will hit their
pocketbooks and cost jobs.
• And jobs and the economy are the top
concerns of Americans.
But The OBAMA Administration Pushes On
• The EPA has issued an ―Endangerment‖
finding regarding C02 emissions.
• Threatens to exert ―Command and Control‖
over the economy.
• Several states and Industry groups are
filing lawsuits to stop the EPA.
• If those lawsuits challenge the science
the EPA is basing its finding on, they just
Climate Change Theories Are Facing
Their Own ―Endangerment‖ Findings
• ―Climategate‖: The leaked emails of the East
Anglia University Climate Research Unit.
―Hiding the Decline‖
Gaming the Peer Review System
Obstructing Freedom of Information Act Requests
Conspiring to delete records that do not fit the
East Anglia’s CRU is the coordinator of the U.N.’s
International Panel on Climate Change (IPCC)
Dr. Phil Jones’ Recent Admissions
• There has been no significant warming
in the last 15 years.
This fact turns the IPCC “Global Warming”
prediction models on their heads.
• The global temperature during the early Medieval
Period was likely as warm if not warmer than today.
This casts strong doubts on the theory of
“man-made” global warming.
• There is no consensus in the scientific community
that ―Global Warming‖ is man-made.
This flies in the face of the claims that the science
The Copenhagen Fiasco
• The recent International Climate
Change Conference in Copenhagen
resulted in no binding agreement on
carbon emission reductions.
• China and India—among others—made
it clear that they were not going to harm
their economies by reducing emissions.
Why should the U.S. ship
more jobs to countries that
won’t reduce their carbon
Congress should not pass
―Climate Change‖ legislation but
should act to expand domestic
production of oil, gas, clean coal
and nuclear power and alternative
energy sources to reduce our
dependence on foreign energy
Federal Health Care Legislation:
Not Passed But Not Dead
• House Bill: Unacceptable to the Senate.
• Senate Bill: Unacceptable to the House.
• Sen. Scott Brown’s election = 41 Senate
votes to sustain a filibuster.
• Start over and negotiate with
Republicans on a Bipartisan bill.
• Force the House to pass the Senate
Bill as is.
• Use ―Reconciliation‖ to try to pass
a bill acceptable to the Democratic
majorities with a simple majority
vote in the Senate.
• House and Senate Democrats can’t
agree on what they want in a bill.
• Using reconciliation to pass
comprehensive health care
legislation is like trying to do
heart surgery with a butter knife.
Business Community Concerns
• Cost Shifting
25-30% of insurance premiums currently
are a result of the Federal Government
reimbursing providers less than what it
costs to provide the services.
Those costs are passed on -- to the maximum
extent possible -- to private policies.
The Senate Bill contained $400 billion in new
taxes and fees and $500 billion in Medicare
Much of that $900 billion would be cost shifted
to the private sector.
• The $500 billion in Medicare ―Savings‖
probably isn’t real.
• Even if it were you can’t spend it three
Shore up Medicare.
Cover the uninsured.
Reduce the deficit impact of the bill.
• Very little cost containment in the
No significant tort reform (nor will
Does not allow policies to be
purchased across state lines.
Does nothing to reduce Medicare
and Medicaid cost shifting to the
• Medicare has a $37 Trillion
• Why don’t we clean that up first
before launching another huge
What Does The Public Want Congress
and the President to Work On?
• Jobs and the economy
President Obama says that
the lack of economic recovery
comes from the inability of
small businesses to get loans.
QUESTION: If you were a small business, would
you borrow money to increase your number of
• You did not know how much of an impact a huge
federal health care bill would increase your cost
• You did not know how your business’s energy
costs and paperwork requirements would be
impacted by the EPA taking ―command and control‖
of the economy to address carbon emissions?
• You had to be concerned about union organizers
being able to organize your workforce by
intimidating a majority of your employees to join
without the protection of a secret ballot election?
A Better Path To Economic Growth
• Kill the Cap and Trade bill and adopt an aggressive
approach to developing America’s domestic energy
supplies along with the development of alternative
energy sources. This will create jobs and improve
our national security.
• Tell the unions that they are going to have to continue
under the current rules in their organizing attempts
and will have to convince workers that there is real
value in joining a union.
• Stop any large new federal programs—including the
health care legislation—and begin immediately to
reduce the $1.3 trillion current deficit and the $14.3
trillion national debt.
Big Challenges are Ahead
in Baton Rouge and Washington
• The business community must be unified stronger
than ever before to survive these challenges.
• LABI had strong partnerships with local chambers
and trade associations on the health care, cap
and trade, and union card check issues.
• We are proud of the fact that those bills didn’t
pass, but we know more challenges lie ahead.
• With everyone working together, success can
and must continue because failure will have
immense costs to our state and our nation.
Louisiana Association of Business and Industry