Two LSU economics professors estimate in a report released Wednesday the state will lose $1 billion in tax revenues and a congressional seat in the wake of hurricanes Katrina and Rita.
Professor emeritus of economics Loren Scott and economics professor James Richardson, director of the Public Administration Institute at LSU’s E.J. Ourso College of Business, released the Louisiana Economic Outlook report for 2006-2007 at the Louisiana Business & Technology Expo’s Top 100 Private Companies Luncheon on Wednesday which was held at the Baton Rouge River Center.
Scott and Richardson estimate that the state will lose 218,600 jobs from its 2004 level next year, resulting in a $1 billion reduction in state tax collections in 2006. The reduction in tax collection will continue in 2007. Scott and Richardson also predict the state will have to reduce its revenue projections by at least $1 billion, forcing the state government to downsize.
Scott also said Louisiana lost 115,000 people in population as a result of the natural disasters and will probably lose a congressional seat in 2010 because of the diminished population.
The state is divided into eight Metropolitan Statistical Areas: New Orleans, Baton Rouge, Lafayette, Houma, Lake Charles, Alexandria, Monroe and Shreveport-Bossier. New Orleans is now the second-largest metropolitan area behind Baton Rouge.
“The worst is isolated in the New Orleans area,” Scott said of the hurricane’s destruction. “But the other seven areas are growing.”
The forecast concluded that the New Orleans MSA must prosper if the state is to recover.
According to the report, about a third of Louisiana’s population lived in the seven parishes that make up the New Orleans MSA before Katrina hit the area. The New Orleans MSA includes Orleans, Plaquemine, Jefferson, St. Charles, St. John the Baptist, St. Tammany and St. Bernard Parishes. Before Katrina hit, the New Orleans MSA was estimated to employ 621,000 people – the largest in the state. About 32 percent of Louisiana’s total work force lived in the New Orleans MSA.
Scott said he has been releasing economic forecasts for the state for 24 years.
The economists completed the original forecast days before Hurricane Katrina and they had to rewrite the entire report based on the effects of both Katrina and Rita, Scott said.
“This forecast is the most difficult and disturbing forecast,” Scott said. “It forecasts the worst time [in Louisiana history].”