Budget 101: Income
A new fiscal year started this past weekend, so this might be a good time for a basic review. Let’s call it “Budget 101”.
We’ll start with state income – also known as revenue.
Fifty-five percent of the $29.2 billion total state budget comes from the federal government. The rest comes primarily from taxes.
“Sales tax revenues are 36%, whereas the next closest category is individual income tax, which is predicted to be 25%,” State Revenue Secretary Kim Robinson says, also noting that changes enacted in spring of 2016 altered the balance of those revenue streams.
Individual income tax collections have also declined because of lost jobs, with Louisiana’s unemployment rate currently the 4th highest in the nation.
“The employment numbers have fallen rather substantially,” economist Jim Richardson observes.
“From our peak point in December 2014, we’re down just about 26,000 jobs,” Legislative Fiscal Analyst Greg Albrecht concurs, adding, “For all practical purposes, we’ve lost jobs in the highest wage sectors.”
“So for our income taxes to get a boost, we need to get jobs back in those areas?” Richardson asks, rhetorically.
“Definitely,” Albrecht agrees.
Those job areas include oil and gas, where price declines have dropped the state’s income from royalties and severance taxes to just 6 percent of total revenue.
Currently, Louisiana gets a bigger chunk of its income from gaming – 9 percent of the total, but even that is stagnant.
“If you’ve got a weak economy you’re going to have weak spending there,” Albrecht explains. “And it’s showing up in the revenue collections.”
What about corporate taxes, you ask? They’re only 4 percent of the state’s total income.
“The fact that 80% of the corporations in the state of Louisiana pay no income tax is a real problem,” says Governor John Bel Edwards.