1. The Budget vs. The Economy Understanding the Present, Protecting the Future Sources: Legislative Fiscal Office; Jim Richardson, LSU; LED; GNO, Inc. Analysis

2. Key Take Aways 2 1.Louisiana has a structural budget deficit 2.Job growth is real – the economic revitalization of Louisiana is working 3.Economic development incentives are only 4% of total exemptions

3. 3 1. Louisiana has a structural budget deficit.

4. Louisiana has a Structural Budget Deficit 4 We are spending more than we are taking in. Sources/ Uses Surplus/ (Deficit)

5. Louisiana Has a Structural Budget Deficit 5 Katrina wind-down coincided with Stelly repeal and Recession Katrina Funding Stelly Repeal Recession Sources of Louisiana Funding State Fees State Taxes Federal Funding

6. Sources of Funds - Total 6 Have fallen nearly $5B since the 2008 peak $27.8B $23.0B

7. Louisiana Has a Structural Budget Deficit 7 There are multiple reasons for the revenue loss Katrina Wind-Down $(1.0B) National Recession $(1.6B) Tax Cuts $(0.9B) Oil Price Drop $(0.7B) Total Loss $(4.1B) Revenue Loss 2008 - 2010

8. Sources of Funds - Taxes and Licenses 8 Most Taxes and Licenses have declined since 2008

9. Sources of Funds - Taxes and Licenses 9 There are multiple reasons for the declines Sales: Growth during Katrina recovery; hit by recession; long-term internet issues Personal : Grew via Stelly, Fed tax cuts, Katrina; hit by Stelly repeal, recession Other: Gas, tobacco, insurance, gaming, etc. move with economy Mineral: Rises and falls with oil & gas prices; horizontal drilling exemption lowers Gaming: Flat Corporate: Hit by: Recession, NOL, Inventory Tax Credit, volatile tax base

10. Sources of Funds - Taxes and Licenses 10 Note: drop in Corporate Income Tax could not have been caused entirely by economic development incentives: Only $296M total in 2013 Only accounted for 4% of total corporate exemptions growth since FY07-08

11. Uses of Funds 11 Spending has been generally flat in recent years Note: Does not include Federal funds; interagency transfers not netted out

12. Uses of Funds 12 Note: Does not include Federal funds; interagency transfers not netted out Government: Rise/fall from Katrina Education: Tuition replaces state support Healthcare: Rises as with rest of nation Public Safety: Flat; declining in real dollars Transportation: Flat; declining in real dollars Spending has been generally flat in recent years

13. Uses of Funds 13 Spending has been generally flat in recent years

14. Uses of Funds - Education 14 Both K-12 and Higher Ed rose until 2009, now flat

15. Uses of Funds – Higher Education 15 Tuition has risen from 35% to 55% of total higher education State General Fund Tuition Statutory Dedications 35% 55% Includes TOPS, funded by State

16. Louisiana Has a Structural Budget Deficit 16 This is compounded by the fact that less than 10% of the budget is discretionary <10% discretionary

17. 17 Job growth is real.

18. Job Growth is Real 18 Greater New Orleans underperformed the USA for 4 decades

19. Job Growth is Real 19 Today, Greater New Orleans ranks with the best in job growth

20. Job Growth is Real 20 Greater New Orleans leads the South in economic development wins – and almost all are post-Katrina.

21. Job Growth is Real 21 The industrial sector is booming, oil price and rising dollar notwithstanding

22. Job Growth is Real 22 State announcements will add nearly 100,000 jobs over the next four years as they come on-line 2015201620172018 98,000 new jobs Source: GNO, Inc. analysis of LED announcements

23. Job Growth is Real 23 We are creating new industries, with high-paying jobs.

24. Job Growth is Real 24 We are diversifying the economy.

25. Job Growth is Real 25 Per capita income has grown 15% over the past six years, and is at its highest point ever.

26. Job Growth is Real 26 Louisiana has experienced seven consecutive years of in- migration, reversing decades of out-migration.

27. Job Growth is Real 27 The positive economic trends are driving other wins – we are entering a “virtuous cycle.”

28. 28 Economic development incentives are less than 5% of total exemptions (and only 1% of total budget).

29. Economic Development Incentives are Small 29 Economic development incentives are only 4% of the total $7B of Louisiana exemptions in 2013, and only 1% of budget

30. Economic Development Incentives are Small 30 The 4% of economic development incentives contain a range of programs that support job-creation

31. 31 Conclusion We must address the structural budget deficit, while continuing to grow our economy for the future.

32. Next Steps 32 1.Education on the facts Legislators Media Social Media 2.Advocacy for solutions 2015 “punchlist” to solve immediate deficit Long-term structural reform How do we not only survive this crisis, but use it to create a better Greater New Orleans and Louisiana?