House approves new business subsidies, new fund for savings or projects

By David Jacobs | The Center Square

The Louisiana House of Representatives on Tuesday approved three tax incentives but fell just short of sending a fourth to the state Senate.

Supporters said the changes would help small businesses harmed by the COVID-19 pandemic and response, which required many companies to shut down or limit their operations. Critics said some of their colleagues were using the pandemic as an excuse to enact unwise policies and drain state revenue.

House Bill 13 would extend the life of the state’s Enterprise Zone program, which subsidizes job creation in low-income areas, and temporarily allow retailers, hotels and restaurants to participate. Rep. Mark Wright, a Covington Republican, said he hoped the expansion would give businesses “some confidence to go hire people.”

“We’re trying to help small businesses,” he said.

Some members complained the change could lead to subsidies for large retailers that prospered during the partial economic shutdown. The Legislative Fiscal Office estimated the legislation would keep about $75 million out of state coffers over five years, though that estimate is largely based on extending the program; predicting how many of the new types of businesses will participate is “highly uncertain,” the fiscal note says.

Rep. Ted James, a Baton Rouge Democrat who used to work for the state’s Department of Revenue, said retail stores, hotels and restaurants are excluded from the program because subsidizing low-wage jobs delivers a poor return on taxpayers’ investment.

“We can’t continue to use the pandemic to pass bad tax policy,” he said.

The House also approved House Bill 19, which would expand the Quality Jobs incentive program to include retailers, restaurants and bars. But the expansion would retain the wage requirements in the current version of the program. New jobs would have to pay at least $18 an hour to qualify for the subsidy.

Gov. John Bel Edwards vetoed a similar bill approved during the regular session, though that bill did not include the wage floor to participate. In the letter explaining his veto, Edwards said the state should not incentivize creation of minimum wage jobs.

The House easily approved House Bill 11, which raises the amount of their sales tax collections businesses can keep from 0.935 percent to 1.1 percent, up to a maximum of $1,500 per month. The change is meant to provide small businesses with a little extra cash flow.

The House did not pass House Bill 17, which would suspend the collection of the state’s franchise tax on the first $300,000 of taxable capital. Once again, the change is supposed to help small businesses, though Department of Revenue Secretary Kimberly Robinson has said large corporations mostly pay the tax.

The vote was 67-25 in favor, falling short of the two-thirds majority it needed to pass.

The House voted 93-5 to approve House Bill 35 by Republican Ways and Means Chairman Stuart Bishop. The bill sets aside $105 million in surplus state dollars to be used for construction projects or to shore up state finances if necessary.

Edwards had wanted to spend all available surplus dollars on projects. As amended Tuesday, funding for any projects in the already-passed state construction budget that Edwards vetoed would go into the new fund.

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