By several estimates, Louisiana boasts the most generous menu of corporate tax incentives in the country. And the most generous incentive of all is the Industrial Tax Exemption Program (ITEP), which allows manufacturers to escape local property taxes for up to 10 years on new capital investments regardless of whether these investments create or retain jobs. But that soon will change, thanks to an executive order issued Friday by Gov. John Bel Edwards that aims to give local authorities more say in how their tax dollars are doled out by the state and ensure that tax breaks are tied to job creation. AP star reporter Melinda Deslatte:
The order spells out that tax exemptions are favored for new manufacturing facilities but that additions to existing plants would face a tougher ride and be required to “provide for new jobs or present compelling reasons for the retention of existing jobs.” Tax break recipients will have to enter into contractual arrangements that will allow the state to cut or remove the exemption if the job provisions aren’t met. Local governing bodies, school boards and sheriffs will be asked to weigh in on the contracts.
The move brought immediate pushback from the chemical industry, which represents 70 percent of the projects covered by the tax break according to the head of its trade association.
The Democratic governor said that although he knew the changes would create “anxiety,” the program needed more accountability. “If we’re not creating or retaining jobs, then there is no rationale for this program,” Edwards said. “I think the state of Louisiana will be much better served by this approach.” But he insisted the changes weren’t aimed at stifling business development. “We are going to be competitive, and we are going to remain very generous,” he said.
The governor’s action follows a report by Together Louisiana detailing the cost of the tax break, which will result in $16.7 billion in lost tax revenue to local governments over the next 10 years – money that could otherwise be used to pay for police, fire protection, schools and other necessities.
Assessing the 2016 Legislature
Lawmakers left Baton Rouge on Friday after three grueling sessions without having raised enough money to keep education, healthcare and other programs operating at current-year levels. Almost no one was happy with the results, which puts the onus on policymakers to craft more permanent tax and budget solutions next year. The Advocate’s Tyler Bridges:
Lawmakers set aside no money for what economists are projecting as a $200 million budget deficit in the fiscal year that ends Thursday, a shortfall caused by a drop in corporate tax collections due either to the economy being in recession, to an excessive number of corporate tax giveaways, or both. Either way, state officials must eliminate any deficit in the upcoming fiscal year, which begins July 1. Lawmakers — at the behest of House Republicans — also punted to next year a total overhaul of the tax system by rejecting interim tax reform measures backed by independent economists who sit on a special task force studying the state’s tax and spending policies. The legislators’ argument was that the changes should be made holistically.
The AP’s Deslatte notes that it will take months for legislators to understand the full impact of the many tax changes they approved during two special sessions.
“Quite frankly, we’re not exactly sure what we voted for,” Sen. Danny Martiny, R-Kenner, said at one point on the final day of the third legislative session since February. As for how much money was raised and spent, everybody’s got a different perspective about the numbers and what they mean. On a couple things, there was widespread agreement as the House and Senate completed their work near midnight Thursday. No one’s exceedingly happy about the budget they passed and the cuts it contains, but lawmakers seemed universally happy about going home after nearly five months of political fights, contentious tax votes and budget haggling.
LBP’s end-of-session commentary is here, focusing on the $1.3 billion fiscal cliff that faces lawmakers in 2018. The Advocate’s editorial board also weighs in, noting that the biggest tax change is a one-penny hike in Louisiana’s regressive sales tax, which disproportionately hurts low-income families. And finally, the inimitable Jim Beam of the Lake Charles American-Press looks at cuts to the TOPS scholarship program, which were backloaded to the spring semester in a move that generated last-minute drama on the House floor.
Joseph Rallo, commissioner of higher education, said, “I have no idea where it (full fall funding) came from. We cannot support that way of doing things.” LSU President F. King Alexander called the idea “a roll of the dice.” He said students could only apply for financial aid once a year, and they might decide instead to hope additional money will come in for the spring semester. Alexander urged them to go ahead and see what aid is available for the full year. Alexander said other schools around the Southeastern Conference were reaching out to LSU’s students because of TOPS uncertainty, “aggressively seeking our best and brightest.”
The face of Medicaid expansion
More than 225,000 low-income Louisiana adults have already signed up for expanded Medicaid coverage that takes effect on Friday. The Advocate’s Elizabeth Crisp takes a detailed look at the state’s innovative approach to enrollment, and spotlights the way it’s helped Jaylin Davis get covered.
Davis had only recently learned that when he turned 19 this spring he aged out of the Louisiana Children’s Health Insurance Program and lost his LaCHIP health insurance. “They just sent me a letter in the mail,” he told a reporter observing a recent Medicaid enrollment drive on the BRCC campus. At that time, Davis, a BRCC student and local Wal-Mart stocker, said he had no idea that the state is expanding Medicaid to cover thousands of people like himself. He hadn’t heard the political bickering nor the national praise that’s been heaped on Gov. John Bel Edwards for expanding the health care program through the federal Affordable Care Act. As he made his way across campus, still wearing his dark blue Wal-Mart vest, a group promoting the sign-up effort encouraged him to meet with one of the certified enrollees inside to see if he would qualify. Thirty minutes later, he had a slip in hand and was told to keep an eye out for his new Medicaid card.
Health and education are closely linked
Children are much more likely to succeed in school if they are healthy. That simple premise underlies the Health & Education Alliance of Louisiana, which was founded in the wake of Hurricane Katrina as an effort to rebuild the shattered public schools in New Orleans. Alliance CEO Phyllis Landrieu, writing in Nola.com, explains what happened next:
As we began to determine the cause of the low education success rate, we found that many of the children had undetected and untreated illnesses that are barriers to learning: poor vision, poor hearing, cavities, oral decay, obesity, asthma, chronic colds and other illnesses that held them down. Most of the children had never seen a doctor. In Louisiana, missing 19 days of school is cause for dismissal. Forty percent of our students were missing school and not graduating. … Since 2005, 30,000 health and education interventions have been accomplished on New Orleans students with impressive results. Four critical outcomes have been attained: the student immunization compliance rate has been improved from 50 percent to 99 percent (avoiding a potential community outbreak), and participating schools have successfully obtained Medicaid provider status to provide access to a revenue stream to fund the health needs of students. Schools have received thousands of dollars from Medicaid, allowing them to replace the education funds they previously were spending for these health services.
Number of the Day
225,900 – Number of Louisianans who had signed up for expanded Medicaid coverage as of June 24 (Source: The Louisiana Department of Health via The Advocate)