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Economic Data

FISICAL YEAR COMPARATIVE STATEMENT FISCAL YEAR 1997-1998 THROUGH 1999-2000

 

 

State of Louisiana

Economic Assumptions and Revenue Forecasts

for Fiscal Years 1998/1999 and 1999/2000

Economic Outlook

The United States economy is expected to continue the growth it has experienced since 1991. Real gross domestic product growth should approximate 2.5% in fiscal year 1998/99 and 2.4% in fiscal year 1999/2000. Inflation should also be in the 1% - 2% range during the forecast period. Employment growth rates are expected to decline during each forecasted year. Employment growth is expected to slow to 1.9% during the current fiscal year and to 1.3% during the next fiscal year.

Louisiana Employment

Louisiana employment has grown for eleven consecutive years. Louisiana’s employment has grown faster than the nation’s during seven of the past nine years. Louisiana’s annual average employment growth during the 90's is 2.3%, while that of the United States is 1.7%. Louisiana’s average employment growth of the past five years is the highest since 1982. State economic growth is expected to follow the national trend, that is, to slow. Louisiana’s employment is projected to increase by 1.4% and 1.3%, respectively, during the next two fiscal years.

Since 1986/87, Louisiana employment on an annual basis has increased by 385,000. The service sector, led by the health sector and gambling industry, has provided half of the additional jobs. Trade, government, manufacturing and construction have also contributed significantly to the employment gains. The manufacturing growth is impressive, in light of the fact that the nation’s manufacturing employment declined during this period. Manufacturing jobs were created in the chemical, petroleum refining, and fabricated metal industries at the beginning of the decade. More continuous manufacturing growth has occurred in the machinery and transportation equipment industries. The table below itemizes the employment changes by industry.

Louisiana Employment

Change from 1986/87 to 1997/98

In Thousands

Total Non-Agricultural

385

Services

190

Wholesale/Retail Trade

72

Government

50

Construction

33

Manufacturing

28

Transportation, Communications & Public Utilities

8

Finance, Insurance & Real Estate

1

Mining

0

In terms of an increase in the absolute number of jobs, the service and trade sectors are expected to lead in employment gains for the forecast horizon. In terms of percentage growth, construction services are expected to lead, with growth of each expected in the mid-2% range. Through the end of 1998, the high growth industries within the service sector are the business, engineering and accounting, and the repair services.

Louisiana Personal Income

Louisiana’s personal income is projected to increase by 4.5% and 4.3%, respectively during fiscal years 1998/1999 and 1999/2000. Louisiana income growth during the 90's has averaged 5.7%.

Revenue Summary

Fiscal Year 1997/98

Available general fund revenue was $5,788 million in fiscal year 1997/98. Available general fund revenue increased by $129 million, which was 2.3% more than 1996/97. The following table ranks the revenue sources with the largest percentage growth and at least a $10 million increase over the prior year during fiscal year 1997/98.

 

 

Revenue Source

Growth in Million $

Growth in %

Interest

25

44

Individual income

186

15

Inheritance

11

14

Special Fuels

10

11

Video Poker

13

7

Gasoline

26

7

Motor Vehicle Sales

14

6

Sales

30

2

Interest income increased because it was redefined to include Transportation Trust Fund interest income. Inheritance achieved its highest level ever as well as double digit growth due to the stock market gains in recent years. Special fuels and gasoline reflect an accounting/reporting aberration that made 1996/97 collections appear to be low. Video poker, motor vehicle sales, sales (net of the tax base reduction), and individual income tax collections reflected the better than average state economic growth during 1997/98. Individual income tax collections increased more than normal due to the large capital gains resulting from the surging values in securities markets.

The following table ranks the revenue sources with the largest annual percentage declines and at least a $10 million decline during fiscal year 1997/98.

 

Revenue Source

Growth in Million $

Growth in %

Corporate income

21

5

Severance

67

16

Royalties

57

20

Excise license

28

20

Bonuses

13

24

Corporate Income reflects the decline in corporate profits. Severance and royalties decreased because oil prices fell by $5.50 per barrel. Furthermore, natural gas prices and production also declined. Excise license collections suffered from the acceleration of the phase in of various tax credits. Bonuses began their return to normal levels following the increased bidding for mineral leases during the past 3 years.

 

Fiscal Year 1998/99

The Revenue Estimating Conference’s official forecast of available general fund revenue is $5,814.2 million in fiscal year 1998/99. The forecast is $26 million or .5% above actual collections for fiscal year 1997/98. The following table ranks the revenue sources with the largest expected annual percentage changes, which are expected to change by at least $10 million during fiscal year 1998/99.

 

Revenue Source

Growth in Million $

Growth in %

Corporate Franchise

26

10

Individual income

100

7

Riverboat Gaming

15

6

Video Poker

10

5

Sales

58

3

Gasoline

10

2

Excise License

-12

-10

Corporate Income

-58

-16

Severance

-68

-19

Royalties

-49

-21

All the revenue gains are consistent with the mediocre growth that is expected in the state’s economy. The excise license decline reflects the growth in insurance tax credits. The credits now exceed the net insurance tax collections. The corporate income tax decline reflects declining corporate profits. The mineral decline reflects lower oil and natural gas prices as well as lower oil and natural gas production.

 

Fiscal Year 1999/2000

The Revenue Estimating Conference’s official forecast of available general fund revenue is $5,879.4 million in fiscal year 1999/2000. The forecast is $65 million or 1.1% above the official forecast for fiscal year 1998/99. The following table ranks the revenue sources with the largest expected annual percentage changes, which are expected to change by at least $10 million during fiscal year 1999/2000.

 

Revenue Source

Growth in Million $

Growth in %

Riverboat Gaming

16

6

Individual income

94

6

Sales

61

3

Corporate Income

-11

- 4

Severance

-19

- 7

Lottery

-14

-12

Video Poker

-60

-29

Bonuses

-22

-44

All the revenue gains are consistent with the mediocre growth that is expected in the state’s economy. The corporate income decline reflects declining corporate profits. The severance decline reflects a lower natural gas tax rate as well as lower oil and natural gas production. The Lottery is not assumed to receive large gains from powerball in 1999. Nearly half the parishes voted to eliminate video poker. Bonuses reflect a return to the level that existed prior to the mid-90s.

 

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