Louisiana Lawmakers Pass Tax Breaks As Virus Recovery Effort

Louisiana Legislature
Sen. Mike Fesi, R-Houma, standing, speaks with Sen. Louie Bernard, R-Natchitoches, on the Senate floor in the final hours of Louisiana's special legislative session, on Tuesday, June 30, 2020, in Baton Rouge, La. (AP Photo/Melinda Deslatte)

BATON ROUGE, La. (AP) — In their special session that ended Tuesday, Louisiana lawmakers agreed to expand and extend business tax credits, exemptions and incentive programs, bills that were pitched as a coronavirus recovery tactic and are estimated to siphon millions from the treasury each year.

Supporters said the measures would help businesses struggling with closures and restrictions mandated by Gov. John Bel Edwards in response to the virus outbreak.

“We have to take care of the businesses that employ people that provides them the income to be able to move forward,” said Sen. Barry Milligan, a Republican from Shreveport. “The more businesses we lose, the more paychecks we lose, the more of our tax base we lose.”

Critics said the approach was haphazard, involved too little study and could worsen the state’s budget problems from the virus.

“We know we have fiscal woes ahead,” said Sen. Karen Carter Peterson, a New Orleans Democrat.

Sen. Jay Morris, a Monroe Republican, cautioned his colleagues: “It’s easy to give away. It’s hard to take back.”

The Democratic governor wouldn’t say Tuesday evening which measures he will support. He said he worried about the impact on the state’s budget and needed to review what the cost of the tax breaks would be.

The bills would cost about $25 million in the budget year that begins Wednesday, according to financial estimates. But in some instances, the financial impact of the bills is not entirely clear — and some of the proposals are back-loaded, so they will cost tens of millions more in later years. The tax breaks, with extensions included, are estimated to total at least $230 million in lost tax collections over five years, but could cost much more, according to nonpartisan bill analyses.

Republicans criticized the financial estimates, suggesting the state will reap tax revenue by stimulating the economy.

One of the largest tax breaks, starting at $11 million in the first year and growing annually, would benefit the state’s gambling industry.

Lawmakers passed bills that would:

—Extend Louisiana’s expiring historic tax credit program another four years, to expenses incurred before mid-2026. Lawmakers added a spending cap on the program for applications submitted after July 1.

—Allow businesses required to collect and remit sales taxes to keep a larger portion of those tax collections for themselves.

—Broaden a tax credit program for businesses that create jobs in certain underserved areas deemed Enterprise Zones to allow retailers, restaurants, bars and hotels to participate if they have no more than 50 workers. The expansion would end in mid-2023.

—Expand a payroll subsidy program for certain businesses that offer higher-paying jobs and health benefits to virus-impacted retailers, restaurants, bars and hotels if they have no more than 50 workers. The expansion would end in mid-2023.

—Renew an expiring tax credit program for certain research and development expenses for another four years.

—Deduct from the taxes owed by riverboat casinos, the land-based casino in New Orleans and slot machines at Louisiana’s racetracks some of the money given to gamblers through promotional play wagers.

—Suspend part of the corporate franchise tax for one year.

—Restart an expired program that provides state tax credits for investments in low-income communities through the federal New Markets Tax Credit Program. A total of $45 million in credits could be claimed over four years, starting in the 2023-24 budget year.

—Extend the Angel Investor tax credit program for start-up businesses through mid-2025 and increase the credit for business investments located in federal “Opportunity Zone” neighborhoods.

 

By AP reporter Melinda Deslatte

Categories: Alerts, COVID-19, Politics, Today’s Business News

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