A Legislative Fiscal Office analysis of the projected 500-million-dollar state budget surplus credits most of the higher-than-expected revenue for the last fiscal year to the 2017 federal tax reform.
Chief Economist Greg Albrecht says it’s true that the state’s improving economy played some part in the excess of revenue collections over forecast, but it’s not the biggest reason why.
“We’re definitely better today than we were at our trough point back in the middle of 2016, but the big step-ups have to be attributable to the federal tax law changes,” said Albrecht.
Louisiana’s tax code is tied in parts to federal tax levels, which means a federal cut is always partially offset by state tax liability increases. Albrecht says that’s how federal reforms can bolster state coffers.
“If federal taxes go down you have a smaller deduction at the state level which means we have a larger state tax base that we are taxing with the same rates,” said Albrecht.
Senate President John Alario was quoted by the AP as saying that Louisiana’s tax code related to federal taxes is not the case in some other states.
Albrecht says part of the reason revenue exceeded their forecast this year is because the Revenue Estimating Conference is trying to be conservative with their estimates.
“I think we would rather have that than revenue losses in the middle of the year, or especially at the end of the year because we have to then scramble to cut the budget when we are already operating or find some other way to finance that shortfall,” said Albrecht.
