Newsletter Sign-up

 

Revenue Stabilization Trust Fund

Vote Yes

Constitutional Amendment #5

November 8

For decades, Louisiana has been caught in the same cycle—when times are good, the state spends every dollar generated—and when times are bad, there isn’t enough revenue to pay for all of our obligations. All too often, we’re left with hard choices like cuts to healthcare and education or raising taxes on hardworking families.

Without raising taxes, the Revenue Stabilization Trust Fund will take the volatility out of our state’s revenues and spending practices. Please join me—along with Democrats and Republicans across the state—and vote for this common sense, long-term solution on November 8.

Republican and Democrat Bipartisan Support
Unanimously passed in the Louisiana House and Senate and now goes to a vote of the people

“A spending reform that should not be overlooked.”
-Council for a Better Louisiana

Although investing tax dollars can be good public policy—like raises for teachers—we need better planning to ensure the state can meet those obligations when the economy slumps and revenues decline.

The Revenue Stabilization Trust Fund does just that—without raising taxes.

It is fiscal reform that prevents politicians from spending every dime they collect from taxpayers every year. It creates a trust fund where excess dollars will be deposited during good years to build an asset for the future.

It is overwhelmingly supported by Republicans, Democrats and Independents. In fact, the legislation unanimously passed through the House and Senate. Now, the constitutional amendment to create the Fund will go to a vote of the people, and it must receive a majority to pass.

That’s why your vote for Constitutional Amendment #5 on November 8 is critical.

How does it work?

We chose to focus on the State’s mineral and corporate tax revenues because they can change drastically from one year to the next, adding greatly to the volatility of our economic cycles. Annual corporate tax revenues, for example, have gone as high as $1 billion and as low as $262 million in the last nine years. Then we calculated a middle range revenue projection over the last twenty years that would allow for a responsible budget. What the numbers showed was that our budgets can be strong and cover necessary expenditures with $660 mineral revenues and $600 corporate revenues. So, without raising taxes, Constitutional Amendment #5 requires us to save any money that we collect beyond those amounts and put it in the Revenue Stabilization Trust Fund.

Where does the money go?
Once deposited, the dollars grow into a valuable asset for Louisiana, but it doesn’t just sit there! First, the interest generated off of the Fund each year is deposited back into the State General Fund for appropriation by the legislature. Once the Fund reaches $5 billion, the Legislature is authorized to use up to 10% of the Fund to work on the things that seem to always get left behind, like transportation infrastructure and construction projects. Additionally, 30% of the Fund deposits will go to pay down currently unfunded state retirement debt.

Will this tie our hands when we have a budget deficit and need money like we do right now?
No! We worked with experts around the country to find a responsible cap that wouldn’t be too high when we’re hurting financially or too low when we’re in a stronger revenue position. Right now we’re recovering from a low point, so we don’t expect to hit these caps for at least the next five years. Which means that we can use everything we have right now to get back on our feet again.

Will this affect the Rainy Day Fund?
No—it doesn’t impact any of the money that contributes to the Rainy Day Fund. The Revenue Stabilization Trust Fund is designed to work hand in hand with the Rainy Day Fund to create a stable funding structure—much like it functions in other states.

Has this ever worked before?
Yes! Seven other states that have suffered from the same boom and bust due to volatility in the oil and gas industry have created similar trust funds. States like Alaska, Montana, North Dakota, New Mexico, Utah, West Virginia and Wyoming have all found some prosperity and peace of mind.