Re: Louisiana economic outlook for 2011-12

Louisiana is expected to experience the second largest percentage drop in tax revenues of the fifty states. Furthermore, it is expected to be first in the nation in personal income tax collections declines, second in the loss of sales taxes, and in the top 10 percent in losses of corporate tax revenues. At the beginning of 2010 (mid-fiscal year), the state faced a $197 million shortfall due to general declines in sales tax and personal income tax revenues. Louisiana's projected deficit over the next year could be the largest percentage decrease of any state in the union. At present, a $1 billion shortfall is expected for 2011, followed by another $2 billion shortfall in 2012. In past years, Louisiana tended to make changes on the revenue side in the form of changed or increased taxes, but now is attempting to make adjustments almost totally on the expenses side and at a tremendous institutional and personal loans with bad credit to its residents. The recently enacted Stelly Plan has exacerbated the problem by decreasing the amount of income tax revenue available. While Louisiana did not experience the precipitous decrease in residential property values that hit a number of states, it is not able to rely significantly on property taxes because of a very large homestead exemption.