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Time to Reflect

January 12, 2015

By: Stephen Waguespack

Happy anniversary LABI.

This year marks the 40th anniversary of the Louisiana Association of Business and Industry (LABI), an organization I have been privileged to lead as president since 2013. For decades LABI has been Louisiana’s leading business advocacy organization. Today, we proudly represent over 2,300 businesses across the state, working tirelessly to foster a climate for economic growth by championing the principles of the free enterprise system. 

As Louisiana's Chamber of Commerce and the state chapter of the National Association of Manufacturers, we focus every day on growing the private sector and promoting the many job opportunities for our people that accompany this type of economic expansion.

In only our second year of operation, LABI led the charge to pass Louisiana’s right-to-work law in 1976. That historic effort transformed the economic climate in Louisiana, sent a signal to the rest of the country that we were open for business and set the tone for the type of big challenges our organization was created to tackle. 

Throughout the years, this philosophy and hard work has continued to help create robust employment options for the residents of our state. From the beginning, we have always been willing to put our neck on the line to push for reforms that will help grow our economy. This includes helping to draft and promote workers’ and unemployment compensation reforms during the 1980s, tort reform in the mid-1990s, workforce development in 2008 and spearheading the historic education reforms of 2012. Over the last decade, LABI has achieved several reforms that brought Louisiana’s tax system more in line with those in other states, making us competitive for new business investment and jobs.

LABI has always been an active participant in executive, legislative, and judicial elections and will continue to do so going forward. We are honored to represent our dedicated members and remain steadfast in our approach to drive the policy changes needed to help Louisiana reach its unlimited economic potential.

Sometimes our society is hungry for the type of reform policies we serve, and at other times that hunger fades and is replaced with a simple craving for easy to swallow proposals. It will be interesting to see what type of appetite our state has this year.

Louisiana is a tale of two states right now. 

In the private sector, we are on the right track. We have seen over $100 billion in announced projects throughout the state and Louisiana is soon expected to surpass two million non-farm jobs for the first time in history. Our economy is also diversifying before our very eyes, with growing technology, trade, health care and manufacturing sectors joining our more traditional economic drivers. Our employment trends continue to outperform the nation and our employers are growing their businesses at a promising rate.

In the public sector, our state continues to experience deficits leading to reductions in government spending. This national trend remains in Louisiana due to several factors, including a continuing right sizing of government after its rapid expansion immediately following the 2005 hurricane season, commodity price reductions due to global markets and the continued impact of the national recession.

In the FY04 budget, the Louisiana budget was $16.8 billion.  Only four years later, it was $29.6 billion. That is roughly a doubling of the state budget in four years’ time, a growth rate unsustainable for any government at any level. We now have a state budget of $25.6 billion, meaning that we have grown government by roughly $9 billion dollars in 10 years. 

Think about that for a moment. If you had been told 10 years ago that Louisiana would grow government by just under $1 billion every year for the next decade, you would think that would be a strong growth rate. This is where we find ourselves today, yet the storyline being pushed out of Baton Rouge is one of a budgeting catastrophe.

This year, the chorus by some to raise taxes on the Louisiana people to grow government will be loud. Some policymakers from every political persuasion will fall prey to this talking point, trumpeting the benefits of taking dollars out of private sector budgets to expand the size of public sector budgets. As you hear this pitch, remember how much our public budgets have grown over the past decade and demand that policymakers embrace reform policies that more efficiently use your tax dollars. 

Milestone anniversaries are a great time to reflect. For our 40th anniversary, we will do plenty of reflection on LABI’s legacy and its responsibilities to come. This is also a milestone moment for Louisiana to reflect on itself. As our state stands on the brink of an economic renaissance, what steps should be taken to make sure we make the most of this moment?

Will Louisiana walk away from hard-fought reforms set in motion over the years? Will Louisiana prioritize government growth over private sector growth? Will Louisiana make the additional tough reforms needed to turn temporary economic momentum into long-term, sustainable growth in today’s global economy? What road will Louisiana take?

As we all reflect at this critical moment in our history, these are the questions that must be carefully and prudently considered and wisely answered. When we blow out our anniversary candles this year, our wish will be that Louisiana makes the right choice.