LBP testimony on HB 846

LBP testimony on HB 846

May 27, 2020

To the Members of the Senate Revenue & Fiscal Affairs Committee, 

My name is Jan Moller, and I’m the executive director of the Louisiana Budget Project, a nonprofit policy research and advocacy organization focused on policies that lift up low- and moderate-income families. 

I write today in opposition of House Bill 846, which would create a new state subsidy program for jobs in the retail, food service and accommodation industries for a period of up to five years. While this bill is undoubtedly well-intentioned, it would saddle Louisiana with a potentially large, unpredictable new subsidy program that will drain scarce resources from the state treasury at the worst possible time. 

This bill would create the Competitive Projects Payroll Incentive Program. But it has nothing to do with competing for big economic development projects. Instead, it commits Louisiana taxpayers to underwriting 6% of the salaries for people who are hired or re-hired for jobs in three industry groups that pay among the lowest average wages in Louisiana. This open-ended corporate subsidy would apply to any food service, retail or accommodation business that hires or re-hires at least five people between May 15, 2020 and December 31, 2021. The subsidy could last up to five years. 

The only requirement to receive this taxpayer subsidy is that the jobs pay at least the federal minimum wage of $7.25 an hour. There is no requirement that the subsidized workers be provided with health insurance, paid sick leave, retirement or any of the other benefits that we associate with good jobs. 

According to Louisiana Workforce Commission data, retail jobs in Louisiana pay an average of $540 per week. Accommodation jobs pay $547 per week, while the weekly wages for a food service worker is $331. That is not the type of wage that can support a family in 2020, and not the type of job we should be underwriting with our tax dollars. 

The Legislative Fiscal Office analyzed this bill and said it could “result in substantial state revenue losses.” It doesn’t take an economist to understand why: The industries in question have shed more than 100,000 jobs since the Covid-19 economic shutdown began in mid-March. As the economy reopens and recovers, many of these workers will be re-hired for their old jobs. With this bill, you would be committing the taxpayers of Louisiana to subsidizing economic activity that will happen anyway. 

Subsidizing these businesses in low-wage industries will sap resources that could otherwise be invested in education, workforce training, health care, public safety or other programs that create a stronger economic foundation for us all. You would be adding more uncertainty to a state budget that has already seen a nearly $1 billion decrease in projected revenue since late January. 

I urge the committee to defer this bill.