Last Modified: Wednesday, June 06, 2012 6:04 PM
If there was any positive by-products from the bruising battle waged over the state budget these past few weeks in the state Capitol it is this: some lawmakers have pledged to seriously study corporate tax breaks that have been handed out over the past few years.
The issue has produced odd political bedfellows — fiscal conservatives and liberal Democrats.
“We’re told we’re going to tighten our belt and we’re going to live within our means,” said state Rep. Jon Bel Edwards, D-Amite. “But we keep giving our means away.”
He said four years ago, the state took in $1 billion in corporate tax revenues.
‘‘It’s $200 million this year and next year they’re talking about a negative,” said Bel, referring to the tax credits and rebates awarded to business.
According to the Louisiana Budget Project, companies paid $939.7 million in corporate taxes in fiscal year 2007-08. For 2011-02, they are expected to pay $141 million, a drop of 85 percent.
Other sources of state revenue — sales taxes, income taxes and severance taxes — are also down, but not to the extreme of corporate taxes.
State Rep. Jim Fannin, D-Jonesboro, chairman of the House Appropriations Committee, said the state is giving away too much of its revenue.
During the debate over the use of more than $200 million from the state’s rainy day fund to balance the budget, Fannin told a fellow legislator, “If we hadn’t voted for so many rebates and tax cuts, we wouldn’t be talking about a rainy day.”
Both chambers unanimously approved a bill by state Rep. Katrina. Jackson, D-Monroe, that would require state agencies annually report to state lawmakers whether a tax incentive that the agency has granted meets the purpose for which it was granted and whether the state receives a positive return on the tax break from the business or industry.
Department of Economic Development Secretary Stephen Moret has touted corporate tax breaks as a way to produce new jobs for the state. He said those new jobs mean new tax revenue in both payroll and sales taxes.
Last year, Moret cited tax credits that helped lure Electronic Arts to LSU. The company received a 35 percent tax credit on all Louisiana jobs directly involved in the development of interactive products and 25 percent tax credit on all direct support activities like training, work stations of a building lease.
He said the company hired 400 people last year and expects to add another 200 employees.
Tax breaks, Moret said, are the price the state has to pay to compete with neighboring states to land companies in Louisiana.
These corporate tax breaks deserve thorough scrutiny to ensure that they are producing more in tax revenue than they are giving up. Otherwise, they are deals gone bad for Louisiana.
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.