Wednesday, April 27, 2011

From economic development to business taxes — an overview of the regular session of the Louisiana Legislature.  By Jeremy Alford

Lawmakers have a new deadline: no later than 6 p.m. June 23.

The challenges are nothing short of historic — principally, addressing a record $1.6 billion budget shortfall for the 2011-12 fiscal year.

What does this mean for business and industry? Well, that depends on the Legislature, doesn’t it?

Since it’s an odd-numbered year, lawmakers will be tasked with considering fiscal issues such as taxes. But the options don’t stop there: They could hand down massive budget cuts, revoke tax incentives already on the books or use one-time funds to plug recurring expenses.

To be certain, taxes are a tall order. Lawmakers face re-election in the fall, and Gov. Bobby Jindal repeatedly has vowed not to raise taxes. But that hasn’t stopped some politicos.

For example, Rep. Harold Ritchie, a Bogalusa Democrat, has filed House Bill 63 to boost the state sales tax on a pack of cigarettes by 70 cents. He’ll likely make a persuasive argument, given that he’s a smoker and a funeral home owner.

There could also be a push to lessen the tax exemption applied to drilling in the Haynesville Shale. Predictably, Jindal is against the idea; he already has promised to veto anything akin. Other opponents maintain changes to the exemption would stifle the current $10 billion investment in north Louisiana’s record-setting shale play.

As in previous years, Jindal is likely to let a few fees slip by. Already there are more than 100 fee-related bills up for debate, like:

• House Bill 181 by Rep. Mert Smiley, R-Port Vincent, addresses filing, witness and mileage fees associated with proceedings before the state tax court and its small claims division.

• House Bill 228 by Rep. Karen St. Germain, D-Plaquemine, adjusts the method used to determine certain truck registration fees.

• House Bill 299 by Rep. Simone Champagne, R-Jeanerette, would charge a fee for the Louisiana seafood prestige license plate.

If there’s an area that’s ripe for reform, it’s Louisiana’s tax structure. The Louisiana Budget Project, a nonprofit advocacy group, believes lawmakers should jump in headfirst. More specifically, the group points to 441 tax exemptions that cost Louisiana more than $7 billion annually.

Of the 179 sales tax exemptions on the books, LBP contends 90 aren’t classified and are lumped under “other exemptions” at a cost of $3.8 billion.

LBP analyst Tim Mathis argues that any strategy without tax reforms “just kicks the problem into next year.”

As for job creation, it’s almost certain that lawmakers will be asked to spend money on new companies looking to relocate to Louisiana. The timing is appropriate, given that Jindal is running for re-election with job creation as a priority.

“I think there will be two mega fund projects that come up during the session,” Louisiana Economic Development Secretary Stephen Moret says, without revealing more.

While the House and Senate don’t actually get to vote on such projects, they do have to be cleared through the Joint Budget Committee. Last year, however, lawmakers did try to raid the so-called megaproject development fund, which currently holds in excess of $56 million. With an expected shortfall of $1.6 billion, lawmakers might be interested in trying that again, given that Moret will be coming back to the table.

LED’s budget reportedly contains a 5 percent reduction in advertising and marketing. There are also plans to slash eight regional contractors and four in-house positions. Finally, be on the lookout for fights possibly erupting over funding for worker training, small-business assistance and other retention and expansion programs.

Then there are bills that will impact only a small fraction of Louisiana’s business landscape, like House Bill 75 by Rep. Truck Gisclair, D-Larose, which allows for the taking of mullet for bait purposes only.

Others have been carefully crafted for consumers: House Bill 128 by Rep. Austin Badon, D-New Orleans, prohibits retailers from asking for personal information like phone numbers and ZIP codes before processing a purchase.

For now, though, the one most worth remembering is House Bill 1, the governor’s budget proposal. It currently stands at nearly $25 billion, but will undergo changes through committee and floor hearings. Toward the end of the regular session, the budget bill will be given back to Jindal for review.

It’s a cyclical process that has played out for generations now. The outcomes, however, have always been much more difficult to ascertain beforehand. And this year is no different.

So stay tuned.

Jeremy Alford can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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