By David Jacobs | The Center Square
Louisiana legislators on Tuesday gave final passage to three instruments that will prevent the low balance of the unemployment trust fund from triggering higher business taxes and lower benefits, at least for next year.
They also approved a tax break meant to stimulate the oil and gas industry that, while scaled back from its original form, could reduce state tax collections by tens of millions of dollars.
Senate concurrent resolutions 9 and 5 and Senate Bill 55, taken together, will freeze the amount of employers’ wages that are taxable to pay for unemployment benefits at their current level, keep benefits at their current level, and suspend a “solvency tax” employers would otherwise have to pay now that state officials have begun borrowing from the federal government to keep paying benefits.
The Louisiana Workforce Commission has borrowed at least $61 million so far and expects to need about $233 million in federal money. Lawmakers don’t yet have a plan to pay back all of the money, though they voted to set aside $85 million in a spending bill during the current special session. Many hope a future federal stimulus bill will provide money to shore up the unemployment trust fund that won’t need to be paid back.
Senators also approved House Bill 29 by Rep. Phillip DeVillier, which would provide a severance tax exemption for companies that rework abandoned wells for 24 months or until the cost of investment is paid off, whichever comes first. As amended Tuesday, the program would end in three years, though it could be extended after that point.
The bill could subtract nearly $25 million from state coffers over three years, according to Legislative Fiscal Office estimates. Meanwhile, out-of-state taxpayers would benefit, critics say.
“Our citizens have to make up the difference in tax dollars,” said Sen. Jay Luneau, an Alexandria Democrat.
But supporters said the tax break could spur additional work for in-state service companies. And if it stimulates activity that wouldn’t happen otherwise, state government could see a positive return in the form of additional sales and income taxes, said Sen. Rick Ward, a Port Allen Republican.
State Sen. Sharon Hewitt, a Slidell Republican, said the LFO’s estimates could be “complete garbage” because modeling the true impact is basically impossible.
HB 29 returns to the House for possible concurrence in the Senate’s amendments.