Louisiana dropped 30 places in an annual survey comparing state business climates — the biggest year-over-year loss in 2016. This year’s results halted nearly a decade of progress that put Louisiana among the top-10 best states for business just a year ago.
Chief Executive magazine surveys CEOs annually to determine the best and worst states for business, assessing their perception of familiar states in three areas. The survey put Louisiana at 37th overall. The state ranked 31st in taxation and regulation, 46th in workforce quality, and 46th in living environment.
The report pointed to Louisiana's budget as a contributor to its epic descent in the rankings. In February, newly elected Gov. John Bel Edwards announced that the state faces a more than $900 million shortfall that lawmakers must solve through cuts and raised taxes by June 30.
Louisiana Economic Development Secretary Don Pierson told the Louisiana Record that in addition to the budget crisis, the state has experienced a “deepening of the oil and gas slump” since the last Chief Executive survey.
“Surveys are heavily influenced by recent perceptions, and the perceptions of Louisiana have been colored by our budget challenges, the need for temporary tax increases in the 2016 Special Session and the struggles faced by our oil and gas industry,” he said.
The Louisiana Association of Business and Industry put out a report in April explaining new taxes for businesses passed by state legislators in light of the budget crisis. It said bills passed by lawmakers would raise upwards of $3.5 billion in revenue from taxes over the next five years, including a tax increase of $575 million on employers for fiscal year 2016 and increases of more than a billion dollars in each of the next two years.
Pierson said Louisiana is making progress in other economic areas despite the noted challenges. A diverse set of industries are growing, including software development, digital media, information technology, chemical manufacturing and natural gas projects.
“We are bullish on the future of Louisiana because of all of our port, rail and pipeline strengths — and natural resource strengths — which cannot be found anywhere else in the uniquely advantageous mix that Louisiana possesses,” Pierson said. "We are confident that Louisiana’s governor and legislature will resolve our fiscal challenges, and they are well on their way to doing so. We know that a simpler, fairer tax code is a universal goal, and one that we will strive to implement in Louisiana.”
In this year’s Chief Executive survey, 513 business leaders placed Texas, Florida, North Carolina, Tennessee and Indiana in the top five. California, New York, Illinois, New Jersey and Connecticut are ranked in the bottom five.