Last Modified: Saturday, June 30, 2012 10:01 PM
Are corporate tax breaks awarded by the state of Louisiana amounting to giving away the candy store?
That’s the question a committee of state lawmakers plans to address over the next eight months.
Since Gov. Bobby Jindal took office in 2008, corporate tax revenue has dropped $1.1 billion annually. Some of that is because of a reduction in the corporate tax rate and some is because of tax exemptions and credits that state lawmakers have handed out as if they were campaign handbills.
The state’s budgetary crisis and deep cuts to health care and higher education provides the motivation for the study.
“What we’re looking for is not a witch hunt,” said state Sen. Ronnie Johns, R-Sulphur, who has been appointed to serve on the 14-member committee. “But if we’re giving away more money than we’re taking in, we’ve got to look at that.”
He said 85 percent of all corporations have been exempted from paying taxes, and there is a possibility that 100 percent will be tax-exempt over the coming year.
A report by Good Jobs First, a national policy center that promotes corporate and government accountability in the area of economic development, said Louisiana had one of the costliest and most ineffective tax exemption programs in the country.
As an example, it singled out 10 companies that benefited from the state’s industrial tax exemptions in 2009. The exemptions will cost local governments nearly $130 million in property taxes over the next 10 years.
To date, the 10 companies have combined to create only 45 new jobs.
“We’ve reached a point,” said Johns, “where he have a fiscal responsibility to start looking at what is worth keeping and what are we giving away. The idea of a tax exemption is to create more business, more jobs and more revenue. Obviously, what has transpired over many, many years is not working. We have a fiduciary responsibility to look at every one.”
Johns said he’s been made aware of companies that pay local property taxes, then file for a 100 percent tax credit from the state.
“So it’s a wash company, but the state ultimately winds up paying for it,” he said. “Is that good business?”
Johns, who will be joined on the committee by Speaker of the House Chuck Kleckley, R-Lake Charles, said businesses have announced they’re going to locate or expand and create 500 jobs, receive tax exemptions and five years later have only produced 50 new jobs.
“I know we have to stay competitive, particularly with other Southern states,” said Johns, who said the committee’s intention is not to raise taxes. “We don’t want to upset the apple cart in terms of job creation. But we want to take hard look and make sure that in exempting these taxes is going to be a benefit.”
Formed by state Sen. Jack Donahue’s resolution, the committee is charged with reporting its findings and recommendations by Feb. 1, 2013.
Johns, who previously served 12 years in the House, said he can’t recall another time when the state Legislature has focused so intently on corporate tax exemptions and their impact.
Given the state of Louisiana’s budget, it’s the responsible avenue to take.
This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Ken Stickney, Jim Beam, Dennis Spears, Crystal Stevenson and Donna Price.