Last Modified: Saturday, August 17, 2013 11:04 PM
Louisiana gives tax breaks to many companies with the stipulation that the companies create a specified number of new jobs with a specified pay scale. Where can I find the data that proves these companies have met their obligations to the state?
The state Department of Economic Development’s website has a page devoted to performance data, though a couple of the available reports — those on the Quality Jobs and Enterprise Zone programs — are outdated.
The page includes information on businesses that have applied for tax incentive programs, along with links to LaTrac, the state’s financial transparency website, and to state Revenue Department tax incentive budget reports.
Additionally, the website of the state Legislative Auditor’s Office — www.lla.state.la.us — features reports on the effectiveness of the state’s monitoring of incentive programs. The most recent one, released in April 2012, looked at the Enterprise Zone program.
To be eligible for the EZ program, state law says, businesses must create “a minimum of the lesser of five net new permanent jobs to be in place within the first two years of the contract period, or the number of net new jobs equal to a minimum of ten percent of the existing employees, minimum of one, within the first year of the contract period.”
At least 35 percent of the new jobs must meet one of four requirements, as listed in the audit report:
The employee must live in or near an enterprise zone.
The employee receives some form of public assistance.
The employee lacks basic skills (e.g., below the 9th grade proficiency in reading, writing, or math).
The employee is unemployable by traditional standards (e.g., has no prior work history or job training, has a criminal record, is physically challenged, etc.).
EZ program participants can receive a one-time $2,500 tax credit for each new job, a sales tax rebate on materials and equipment, and a 1.5 percent refundable investment tax credit.
The audit report concluded that the program, initially designed to boost the economies of depressed areas, suffers from several statutory shortcomings, including a 1999 change in the law to allow business outside depressed areas to claim program benefits.
Other issues noted: The program includes high-turnover businesses such as retail stores and allows businesses to use part-time workers in their new-jobs tally, and the law bars LED from providing detailed information on participants in state tax incentive programs, including the incentive amounts.
Most companies that seek tax incentives take part in “statutory incentive programs” such as the Quality Jobs, EZ and Industrial Tax Exemption programs, which furnish incentives only after the state has verified that the companies have met performance standards, said Stephen Moret, state economic development secretary.
“In those cases, companies are not required to make specific up-front commitments; they simply receive the incentives for which they are eligible after they have met the minimum requirements associated with each incentive program,” Moret said in an email.
“Generally speaking, the benefits they receive (e.g., tax exemptions or tax credits) are in direct proportion to what they generate in terms of new jobs, payroll and/or capital investment.”
Some projects, typically those whose developers are looking at several states, receive performance-based grants for infrastructure, relocations and other costs, Moret said. Most of that money comes from Louisiana’s Mega-Project Development Fund and the Rapid Response Fund, he said.
Companies that participate in these programs must sign contracts with the state that outline job, payroll and capital investment totals and include benchmark schedules, Moret said. The contracts also detail the state incentives the companies will receive, along with “clawback terms” — the circumstances under which companies must reimburse the state, he said.
“Twice per year, a report is published on LED’s website providing performance details for all active contracts associated with the Mega-Project Development Fund and Rapid Response Fund,” Moret said.
“Included are the company’s commitments to date (usually a multi-year job and capital investment ramp-up is involved), their actual performance to date, and any clawback information in the small number of cases where companies have underperformed.”
The Informer answers questions from readers each Sunday, Monday and Wednesday. It is researched and written by Andrew Perzo, an American Press staff writer. To ask a question, call 494-4098, press 5 and leave voice mail, or email email@example.com