Informer: Moret: Incentives given after performance verified

By By Andrew Perzo / American Press

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reports — those on the Quality Jobs and Enterprise Zone programs — are outdated.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.

‘Statutory programs’

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.”

Online: www.louisianaeconomicdevelopment.com/page/performance-reporting.

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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 informer@americanpress.com