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20102010Legislative Issues Legislative Issues

ConferenceConference

Louisiana Association of Business and Industry

www.labi.org

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First, The Good News!

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Business Tax Repeals

• Business Utility Sales Tax Exemption fully restored July 1, 2009

• Manufacturing Machinery and Equipment State Sales Tax Exclusion fully phased-In July 1, 2009

• Corporate Franchise Tax on long-term debt will be fully phased-out January 1, 2011 (exclusion is currently at 70%)

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Fiscal Update: Overview

• FY 09-10 (current year) – $28.6 billion budget / mid-year cut of $248M

• Rainy Day Fund – $86.5M used to balance the current budget

• Federal Stimulus – $943M used to balance current budget (add’l federal stimulus funds still available for use in FY 10-11)

• 2009 Amnesty – over $450M collected so far … (estimated to bring in about $150M)

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Fiscal Update: Overview

• FY 11 – projected $1B shortfall (“non-tax” session) Medicaid match – $450M cost increase Annual increases/cost adjustments (“continuation” budget) Total State Funds = $9.75B

(projected increase of $160M from FY 10)

• FY 12 – projected $1.7B shortfall Federal stimulus runs out Medicaid match – annualized $900M Total State Funds = $9.97B

(projected increase of $220M from FY 11)

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Administration Proposed FY 10-11 Budget

Shortfall Strategy: Use $76M of FY09 surplus and $234M from Amnesty Program (total $310M in one-time funds), to pay down debt in FY10, thereby reducing state debt service by $310M in FY11 – the funds made available from the “swap” will be budgeted to DHH, and with federal match, generate up to $1.1B

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Revenue Estimating ConferenceMay 2005 to Dec 2009

Total Taxes, Licenses and Fees

Mil

lio

ns

9,004.90

8,114.60

8,562.80

9,189.60

10,666.70

9,591.209,751.70

9,971.609,844.70

11,826.20

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

May-05 Oct.-05 Feb.-06 May-06 May-07 May-08 May-09 Dec.-09 FY 11 FY 12

CPI vs. Actual Total State Spending

Source: House Speaker Jim Tucker—2010 LABI Annual Meeting.

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Streamline Commission Reforms

• Major reorganization of the Department of Social Services to consolidate 4 offices into one, while

pursuing departmental modernization initiatives

• Louisiana Veterans Home will partner with private physicians

• Elimination of programs, including in DOTD, DPS, and LED

The Commission proposed 238 recommendations. Many of the administrative recommendations were adopted by state agencies and incorporated in the Admin. Budget. A few of the reform items highlighted in the Admin. Budget, include:

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Public Sector Employment Summary(excludes state hospitals)

* Payroll is paid from all funds – SGF, Federal, Self Generated and Statutory Dedicated funds

Source: House Speaker Jim Tucker—2010 LABI Annual Meeting.

Calculated LA FTE Employment at Southern Average

56,752

Actual LA 2007 FTE Employment

70,720

Change in LA FTE State Employment (if at Southern Average)

(13,968)

LA Revised Payroll (approximately $50M per month)*

($600,000,000)

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Louisiana Job Losses

2009 2010 Job Projected

Losses* Loss %**

Statewide 46,900 0.6%

Mining and Natural Resources Sector 5,500 3.6%

Construction Sector 3,900 5.9%

Manufacturing Sector 10,900 1.4%

Source: *Louisiana Workforce Commission** Moody’s Economy.com

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Louisiana Unemployment Rate

Rate Change

December 2009 7.5%

November 2009 6.7%

December 2008 5.5%

0.8%} 2.0%}(December 2009 Southern Avg = 9.6%)

Source: USDOL Bureau of Labor Statistics

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Taxpayer Protection Issues

Right to Independent Appeal:• Taxpayers (TPs) should have the same right to

an independent appeal in local sales tax cases as is afforded TPs in state cases (BTA).

Arbitrary Assessments:• The practice of issuing “arbitrary” assessments

needs to be addressed (whereby TPs are issued a final assessment b/c they would not agree to extension of the 3-yr audit period that is expiring). Private Contract Auditor Program (local sales tax):

• There need to be standards for auditors’ educational and professional experience and stronger

protections for taxpayer confidentiality and records.

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Attorney Fees (local sales tax cases):

• LA law limits the award of attorney fees to only tax collectors – TPs are not awarded attorney fees when they win. TPs must be treated fairly in the awarding of attorney fees.

UTC Enforcement Mechanism:

• Uniform Local Sales Tax Code (UTC) needs an enforcement mechanism – a statewide entity with the authority to address taxpayer issues in one forum (goal is consistent interpretation and application of substantive and procedural laws among all 64 parishes).

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Federal Issues

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How Much of the Atmosphere Is Greenhouse Gases?

Source: National Center for Policy Analysis

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What Are the Greenhouse Gases in the Atmosphere

Source: National Center for Policy Analysis

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Where Do CO2 Emissions Come From?

Source: National Center for Policy Analysis

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What Is the Human Share of the Greenhouse Effect?

Source: National Center for Policy Analysis

Humanity is responsible for about one-quarter of 1 percent of the greenhouse effect.

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Waxman-Markey & Boxer Greenhouse Gas Bills

• Reduce GHG Emissions to 17%Below 2005 levels by 2020

• Reduce GHG Emissions to 42%Below 2005 levels by 2030

• Reduce GHG Emissions to 83%Below 2005 levels by 2050

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Economic Impact of Waxman-Markey on Louisiana

• Job Losses by 2030 26,066 to 35,500

• Decreased Disposable Household Income by 2030 $485 to $874

• Higher Cost of Gasoline by 2030 20% to 26%

• Higher Cost of Electricity by 2030 54%

• Higher Cost of Natural Gas by 2030 77%

Source: National Association of Manufacturers

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Cap and Trade/Climate Change Legislation Outlook

• Congress isn’t jumping through hoops to pass this.

• Public opinion surveys rank this issue dead last among voter’s concerns.

• The public understands it will hit their pocketbooks and cost jobs.

• And jobs and the economy are the top concerns of Americans.

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But The OBAMA Administration Pushes On

• The EPA has issued an “Endangerment” finding regarding C02 emissions.

• Threatens to exert “Command and Control” over the economy.

• Several states and Industry groups are filing lawsuits to stop the EPA.

• If those lawsuits challenge the science the EPA is basing its finding on, they just might win.

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Climate Change Theories Are Facing Their Own “Endangerment” Findings

• “Climategate”: The leaked emails of the East Anglia University Climate Research Unit.

“Hiding the Decline”

Gaming the Peer Review System

Obstructing Freedom of Information Act Requests

Conspiring to delete records that do not fit the story line.

East Anglia’s CRU is the coordinator of the U.N.’s International Panel on Climate Change (IPCC)

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Dr. Phil Jones’ Recent Admissions

• There has been no significant warming in the last 15 years.

This fact turns the IPCC “Global Warming” prediction models on their heads.

• The global temperature during the early Medieval Period was likely as warm if not warmer than today.

This casts strong doubts on the theory of “man-made” global warming.

• There is no consensus in the scientific community that “Global Warming” is man-made.

This flies in the face of the claims that the science is “Settled.”

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The Copenhagen Fiasco

• The recent International Climate Change Conference in Copenhagen resulted in no binding agreement on carbon emission reductions.

• China and India—among others—made it clear that they were not going to harm their economies by reducing emissions.

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Why should the U.S. ship more jobs to countries that won’t reduce their carbon

emissions?

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Congress should not pass “Climate Change” legislation but should act to expand domestic production of oil, gas, clean coal and nuclear power and alternative energy sources to reduce our dependence on foreign energy sources.

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Federal Health Care Legislation: Not Passed But Not Dead

• House Bill: Unacceptable to the Senate.

• Senate Bill: Unacceptable to the House.

• Sen. Scott Brown’s election = 41 Senate votes to sustain a filibuster.

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Obama/Pelosi/Reid Options:

• Start over and negotiate with Republicans on a Bipartisan bill.

• Force the House to pass the Senate Bill as is.

• Use “Reconciliation” to try to pass a bill acceptable to the Democratic majorities with a simple majority

vote in the Senate.

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Problems

• House and Senate Democrats can’t agree on what they want in a bill.

• Using reconciliation to pass comprehensive health care legislation is like trying to do heart surgery with a butter knife.

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Business Community Concerns

• Cost Shifting 25-30% of insurance premiums currently

are a result of the Federal Government reimbursing providers less than what it costs to provide the services.

Those costs are passed on -- to the maximum extent possible -- to private policies.

The Senate Bill contained $400 billion in new taxes and fees and $500 billion in Medicare

“savings.”

Much of that $900 billion would be cost shifted to the private sector.

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• The $500 billion in Medicare “Savings” probably isn’t real.

Shore up Medicare.

Cover the uninsured.

Reduce the deficit impact of the bill.

• Even if it were you can’t spend it three times:

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No significant tort reform (nor will there be).

Does not allow policies to be purchased across state lines.

Does nothing to reduce Medicare and Medicaid cost shifting to the private sector.

• Very little cost containment in the legislation.

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News Flash!

• Medicare has a $37 Trillion unfunded liability.

• Why don’t we clean that up first before launching another huge

entitlement program?

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What Does The Public Want Congress and the President to Work On?

• Jobs and the economy

President Obama says that the lack of economic recovery

comes from the inability of small businesses to get loans.

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• You did not know how much of an impact a huge federal health care bill would increase your cost per employee?

• You did not know how your business’s energy costs and paperwork requirements would be impacted by the EPA taking “command and control”

of the economy to address carbon emissions?

• You had to be concerned about union organizers being able to organize your workforce by

intimidating a majority of your employees to join without the protection of a secret ballot election?

QUESTION: If you were a small business, would you borrow money to increase your number of employees if

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A Better Path To Economic Growth

• Kill the Cap and Trade bill and adopt an aggressive approach to developing America’s domestic energy supplies along with the development of alternative energy sources. This will create jobs and improve our national security.

• Tell the unions that they are going to have to continue under the current rules in their organizing attempts and will have to convince workers that there is real value in joining a union.

• Stop any large new federal programs—including the health care legislation—and begin immediately to reduce the $1.3 trillion current deficit and the $14.3 trillion national debt.

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Big Challenges are Ahead in Baton Rouge and Washington

• The business community must be unified stronger than ever before to survive these challenges.

• LABI had strong partnerships with local chambers and trade associations on the health care, cap and trade, and union card check issues.

• We are proud of the fact that those bills didn’t pass, but we know more challenges lie ahead.

• With everyone working together, success can and must continue because failure will have

immense costs to our state and our nation.

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20102010Legislative Issues Legislative Issues

ConferenceConference

Louisiana Association of Business and Industry

www.labi.org