In Louisiana, as in other states, legislators and public officials are elected in part to manage the state’s finances. This includes raising revenues (money that comes into the state from various sources) and approving expenditures (money spent to carry out government functions and service the state’s debt). State budgets are complex and volatile because they depend on expected revenues and planned expenditures, which can change throughout the fiscal year. If revenues do not keep pace with expenditures, governments usually have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions also depend on policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, as well as local issues such as crime and education quality.
Highlights
- Between fiscal years 2015 and 2016, total government spending in Louisiana increased by approximately $1.8 billion, from $27.8 billion in fiscal year 2015 to approximately $29.6 billion in 2016. This represents an increase of 6.7 percent.
- In Louisiana, 57.5 percent of total tax revenues came from sales and gross receipts taxes in fiscal 2015. Income taxes accounted for 32.6 percent of total state tax revenues.
- In fiscal year 2015, education accounted for 28.7 percent of state spending, and 27.6 percent went to Medicaid.
Louisiana generates the bulk of its tax revenues by levying personal income tax, general sales tax, and individual sales taxes (otherwise known as excise taxes). The state derives its constitutional authority to tax from Article VII of the state constitution.
Tax policy may vary from state to state. States levy taxes to help fund a variety of services provided by state governments. Tax collections account for approximately 40 percent of total state revenues. The remainder comes from non-tax sources such as intergovernmental aid (e.g., federal funds), lottery proceeds, and fees. The main types of taxes levied by state governments include personal income tax, general sales tax, excise taxes (or special sales taxes), and corporate income tax.