Gov. Bobby Jindal. (Associated Press)
Last Modified: Tuesday, October 02, 2012 4:15 PM
BATON ROUGE (AP) — Lawmakers agreed Tuesday to regulations that will govern a package of new business tax breaks pushed by Gov. Bobby Jindal, even as they continued to worry about how much tax breaks are costing the state treasury.
Louisiana's economic development secretary will be able to offer three tax incentives to businesses considering whether to relocate or expand here. They include rebates for payroll, relocation costs and corporate income and franchise taxes.
A joint House and Senate committee overwhelmingly agreed to the rules overseeing the tax breaks, which were passed by lawmakers earlier this year.
Objections to some of the regulations Tuesday came from two senators who pushed for more details from the Department of Economic Development about what the tax breaks could cost and which independent economist will be chosen to analyze projects slated to get the incentives.
"I want to know if these job creations are actually (happening) or if they're just up there in that dreamland," said Sen. Bob Kostelka, R-Monroe.
Steven Grissom, deputy secretary of the economic development department, said the tax break programs will enhance Louisiana's ability to compete for certain types of business projects, like corporate headquarters, digital media companies and data centers.
Grissom said the tax breaks will only be used if the businesses will generate more tax income through new jobs and economic activity than the rebates will cost the state in lost revenue.
Sen. Robert Adley, R-Benton, said he wants to make sure the incentives are closely monitored by the Legislative Fiscal Office to determine if the state is receiving the benefits promised.
"All I keep hearing is if I grant these tax exemptions, our revenue grows," Adley said. "But our revenue stream keeps going down on the corporate and income tax side. It just doesn't make sense, does it?"
Adley said the financial estimates of what the bills could cost — based on scenarios considered likely by the economic development department — seem to underestimate the potential cost to the state.
The discussion comes as lawmakers have assembled a study commission that is combing through hundreds of tax breaks on the books, trying to determine their worth to the state and their cost.
As they approved the new package of tax breaks, senators added hurdles before Economic Development Secretary Stephen Moret can use them as part of an incentive package.
The tax rebate agreements require approval by a joint House and Senate budget committee after a review by an independent, third-party economist aimed at making sure the state will get more tax revenue from the new jobs created than the tax money lost with the credit.
"We only want to be doing this if there's a positive economic impact," said Rep. Chris Broadwater, R-Hammond.
With joint budget committee approval, the economic development department will be able to offer to companies that meet certain criteria: a payroll tax cut ranging from 6 percent to up to 15 percent; a 25 percent rebate over five years on relocation costs; and a different way to calculate state corporate income and franchise taxes.