Louisiana received a double blow in a new study ranking which states are getting the most bang for their buck from state and local taxpayer revenues.
Not only was Louisiana rated last in the quality of the public services provided to its residents, including public education, health care and public safety, but it came in 46th in terms of how efficiently those funds seem to be used based on per-capita revenues, according to an analysis released last month by WalletHub.com.
Taxpayers in Louisiana and other states on the bottom of the ranking are not getting a healthy return on their investments (ROI), the study titled “States with the Best & Worst Taxpayer ROI” found.
The WalletHub findings were simply par for the course for Eric Peterson, director of public policy at the Pelican Institute for Public Policy in New Orleans.
"When it comes to taxes, Louisianans clearly are not getting what they are paying for,” Peterson told Watchdog.org in an email. “As one of the highest per-capita spenders in the South, our state is a prime example of how more government spending often doesn't equal great outcomes for residents.”
He described the Bayou State as beset with systemic problems, including overspending, excessive taxation and over-regulation.
“As state lawmakers prepare to enter the next legislative session, they must focus on what exactly Louisianans are getting in return for their hard-earned tax dollars,” Peterson said. “As of now, the status quo is providing very little.”
Two main data tables illustrate the conclusions of the WalletHub study, which looked at the fiscal situations in all 50 states. The first table ranks the states based on state and local tax revenues that are paid per-capita and whether those revenues result in a reasonable return in public services, WalletHub analyst Jill Gonzalez told Watchdog.org in an email.
A second table evaluates the quality of government services based on 30 metrics.
"Louisiana is among the states that get the least bang for their buck,” Gonzalez said. “This is because, despite paying $3,100 in taxes per capita, the state ranks last in government services.”
The state’s economy is one of the weakest in the nation, the researchers found.
“The median annual household income is one of the lowest in the country, less than $50,000, the job market is shrinking, almost 20 percent of the state's residents are living below the poverty line, and it has the fourth highest unemployment rate, at 4.9 percent,” Gonzalez said.
Louisiana’s public education system needs to be strengthened to boost graduation rates, and the health care system is subpar, as evidenced by the state’s high infant mortality rate and its low average life expectancy, she said.
Police services also seem to be low-performing since the state has the fourth highest violent crime rate and the fifth highest number of traffic deaths in the nation, according to Gonzalez.
Richard Auxier, a research associate at the Urban-Brookings Tax Policy Center in Washington, D.C., agreed that Louisiana has had a number of fiscal problems, but the WalletHub study may not have captured the complexities of the issues the state is facing.
“It’s an interesting study, and I’m sure it’s getting a lot of attention,” Auxier told Watchdog.org. “... Some of it is just a little simplistic for me.”
The study’s use of the phrase “return on investment” may be somewhat misleading, he said.
“They use term ‘return on investment,’ which is a business term,” Auxier said. “States are not start-up companies.”
Another concern is that the study only measures state and local tax revenues flowing into the state coffers, he said, while charges such as tuitions at state universities, parking fees and toll road revenues are not considered.
In Louisiana, those fees account for about 15 percent of state revenues, which is the average level for a state, according to Auxier.
The study also focuses on per-capita tax revenues, which can vary significantly based on wealth, personal income and property values, he said.
“It just so happens that some states here just happen to have a lot of money,” Auxier said, adding that other states have larger numbers of English language learners and low-income residents. Such challenges can drive up the costs of public education, he said.
Louisiana has been struggling with budget problems for the past decade, forcing lawmakers to find ways to bridge spending needs with limited revenues, according to Auxier.
“Sometimes the problem is policy choices, and you’re doing it poorly,” he said. Other times, history and demographics give some states key advantages over others, according to Auxier.
“A lot of this stuff is baked in,” he said.
