Census data show Katrina impact on public budgets
The Public Affairs Research Council (PAR) today released a national comparison of state and local budgets that highlights the impact of hurricanes Katrina and Rita on Louisiana’s relative revenue and spending levels. “State and Local Revenue and Spending: How Louisiana Compares Post-Katrina” shows that Louisiana experienced extraordinary budget growth due to the economic effects of recovery spending and exceeded the national and Southern averages for per-capita revenues and expenditures by 2007.
This report examines the most recent 10-year period for which U.S. Census Bureau data are available – 1998 to 2007. The 2007 data were released in late 2009. PAR periodically publishes reports and analysis of the census of governments data to add context to public debate surrounding Louisiana’s taxing and spending levels.
“It is clear that spending related to recovery from the hurricanes of 2005 disrupted the state’s budget trends, which had been in line with growth elsewhere,” said Jim Brandt, President of PAR. “What the data doesn’t show is that the spike in spending and revenue collections was temporary and unsustainable. As more data become available we will be able to evaluate not only the continued impact of recovery spending beyond 2007, but also the impact of the national recession on Louisiana’s comparative revenue and expenditure levels.”
The expenditure data show that Louisiana’s 2007 per-capita expenditures were higher than the Southern averages in the areas of public welfare, hospitals, housing and community development, highways, police, corrections and interest on general debt.
Louisiana’s per-capita spending levels were below average in health care (excluding hospitals), higher education, and elementary and secondary education. At five times the national average, the state’s housing and community development expenditures alone, which were directly related to federally funded recovery spending, accounted for more than the $404 gap between the Louisiana and U.S. overall per-capita spending rates in 2007.
On the revenue side, Louisiana’s total state and local general revenues per capita rose at about the same rate as elsewhere until hurricanes Katrina and Rita. After Katrina, Louisiana’s per-capita revenues began growing faster than the national and Southern averages and even exceeded the U.S. average. Overall per-capita revenue rose due to recovery-related spending and an influx of federal disaster aid. The state’s revenue rate from federal sources rose from 103 percent of the national rate in 1998 to 196 percent of the national rate in 2007. Louisiana’s per-capita tax collections were above the Southern averages in the general sales, individual income and corporate income categories, and below the South in the property tax category.
Jennifer Pike, PAR research director, is the primary author of this report. For additional information or to download a copy of the report, go to PAR’s Web site at www.la-par.org.