Proposed business tax breaks could produce 10,000 jobs, Gov. Bobby Jindal says

02 03, 2012 by The Times-Picayune

Gov. Bobby Jindal unveiled a four-bill legislative package of business incentives Thursday that he said could bring 10,000 jobs to the state "in the next five to 10 years." Jindal's plan, announced, at the Louisiana Technology Center in Baton Rouge, includes a proposed change in the state Constitution that would grant a local or parish property tax break for up to 10 years for specific businesses, with the approval of the local governing body.

Those types of businesses would include corporate headquarters, data centers, logistics and warehousing centers, "clean" technology companies, "destination health-care" facilities, research and development operations, renewable energy and digital media and software development.

Jindal said local governments can vote to "opt in" if they want to grant the tax breaks or "opt out" if they do not. Local and parish governments assess property taxes; the state does not.

Jindal said local officials also can decide to reverse their positions after the initial choice is made. "It is not a one-time decision," he said

The 10-year tax break, known as the "industrial tax exemption," is now given to manufacturers who build a plant or expand an existing one in two five-year increments.

Local government lobbying groups have long complained about erosion of city and parish tax bases, but Jindal said the local option gives officials the control.

"I have heard from local leaders who said they want to be the first to have their parishes opt in," Jindal said. He did not name them.

The proposed change in the state Constitution needs a two-thirds vote of the Legislature and then must be approved by voters.

Jindal spokesman Kyle Plotkin said if passed the measure would not cost anything at first but could cost between $1.5 million and $15 million by the 2016 fiscal year and $2.5 million to $25 million by 2017.

Jindal said the package is designed to "bring good-paying jobs" as well as corporate headquarters to the state. "We want to make Louisiana more competitive with the rest of the nation and the rest of the world," Jindal said.

The package also includes a proposed recalculation of the corporate income and franchise taxes based on the amount of "in-state sales they generate, rather than based on a combination of sales, property and payroll factors," Jindal said.

The state is now using the "in-state sales" guidelines just for manufacturers and merchandisers, he said.

To qualify, Jindal said, the businesses must yield a positive return on investment to the state. Plotkin said this portion of the package would cost less than $1 million by the 2014 fiscal year and about $5 million by 2017.

The third element of the plan creates up to a 15 percent tax on payroll for a period of years for companies involved "in highly competitive site selection processes."

The industries targeted for the new incentive include corporate headquarters, "clean technology," "next-generation automotive" entities, aerospace operations, "destination health-care" facilities, research and development operations, pharmaceutical manufacturing and renewable energy.

The last element of Jindal's plan is aimed at enticing "significant" corporate headquarters to the state. Jindal said the state will offer a 25 percent rebate over five years on "qualifying relocation costs to companies that move their facilities to Louisiana" and offer a "positive return on investment."

The salaries paid must be at least $60,000 a year. Plotkin said the bill could cost up to $1 million in 2014 and as much as $1 million to $5 million in 2017.

Rep. Joel Robideaux, R-Lafayette, chairman of the House Ways and Means Committee, the panel that will handle the package, said a lot of details have to be fleshed out in the bills, such as what constitutes a positive rate of return and what a "highly competitive" site-selection process is.

"We have to get it more clearly defined in the bills" when they are drafted or debated, Robideaux said.