The Joint Legislative
Committee on the Budget had to approve
of regulations issued by the Department of Economic Development incident to the
new laws. But the natives seemed a bit restless and did not want to do the
usual rubber stamping of anything proposed in this regard, no doubt because of
the state’s continued precarious budget position and the exposure the issue of
exceptions to the tax code increasingly is receiving, with a select legislative committee overseeing the matter.
Eventually, they went along with it, but only after grilling department
officials to ascertain that some kind of oversight would occur. These concerned
tax rebate agreements that could be offered to employers that would require their
approval 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.
That’s nice to know that legislators seem so keen on making sure that
forgone tax dollars get put to productive purposes. Except that, as the panel
studying the matter has discovered, for many previous breaks legislators seemed
to express no interest at all in getting such information, much less acting
upon it in cases where the state suffers a net cost. Even more underwhelming if
not downright betraying the public trust, they take advantage of these breaks.
Recent notoriety deservedly found its way to the generously-interpreted
Department of Revenue regulation issued previously by its former head that infamously
let loose millions of dollars in credits that the
Legislature never intended – even as
some legislators themselves filed for savings under the rule for the brief time
it operated. But of far larger impact for a far longer period of time with full
knowledge of it from the beginning has been the motion picture tax credit.
Statute required production of biannual reports that, among other
things, assessed the cost of the credits compared to their benefits. After a
decade, the trend never has changed: they massively lose money, on average over the period returning a buck for
every seven forgone. Any legislator would have to live in a bubble not to know
that. Yet not only has the practice continued, the presumably temporary credits
eventually became permanent.
You might think some of those raising the alarm on the regulations just
approved might have sounded it long ago on programs like the motion picture tax
credit, such as state Sen. Robert Adley
who proclaimed, “All I keep hearing is if I grant these tax exemptions, our
revenue grows. But our revenue stream keeps going down on the corporate and
income tax side. It just doesn't make sense, does it?" But that’s because
guys like Adley don’t want to look in the mirror to find out the source of the
problem.
As it turns out, Adley has filed
successfully for the motion picture tax credit in the past, illustrating the manner in which they typically have
cost the state in the range of half a billion dollars in net lost revenue over
the decade. Most of the awardees of these get them in amounts that far exceed
their state tax liability, so they sell them for around 75 cents to the dollar
to others in the state that have can use them to offset their taxable Louisiana
income, essentially lowering their taxes by a quarter if they fully offset.
Adley, whose company he owns enjoys a no-bid contract to provide local governments with gas
management services, has plenty of
need for offset although he has purchased a small amount relative to that.
Perhaps this explains why, in this particular case, he hasn’t seemed interested
at all at what “doesn’t make sense” until now.
1 comment:
I see this morning that our Governor is now is Las Vegas to campaign for somebody.
New Hampshire, Iowa, Florida and now Nevada.
Is he drawing his salary while doing this - his salary for being a public servant of this State?
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