Despite an ongoing debate over the value of Louisiana spending some $7 billion on tax rebates and exemptions annually—and despite the fact that the programs have little oversight—the Legislature’s chief economist, Greg Albrecht, says he doubts lawmakers will be able to rein in any of the spending.
“This spending occurs without regard to the strength or weakness of the state economy, without regard to the competing needs of state government,” Albrecht said as guest speaker at the Baton Rouge Press Club’s weekly meeting this afternoon. “Even as we’ve downsized state government, either because of policy decisions or mid-year cuts like we’re going through right now, this spending continues unabated.”
Of the $7 billion, only about $2 billion goes to programs that Albrecht deemed to be on the table for changes, such as the solar installation tax rebate or the film production tax credit. Most of the $7 billion goes to either sales tax exemptions that would be difficult to eliminate politically, Albrecht said, or constitutionally mandated tax breaks and exemptions so ingrained in the tax code that changes are unlikely.
Albrecht’s view of state tax exemptions—as expenditures, not as uncollected revenue—differs from that of Gov. Bobby Jindal’s administration. Jindal has opposed limiting the exemptions, calling any action reigning them in akin to a tax increase.
But Albrecht maintains the state is spending money, not simply leaving it uncollected. For example, Albrecht said certain programs allow for companies to claim a rebate for 6% to 12% of their payroll expenses.
“You made a payroll payment. We’ll give you 6% to 12% back. We’re making your payroll for you. It’s spending from a business perspective and it’s spending from a state perspective,” Albrecht said.
That’s not a tax incentive, but a subsidy, Albrecht said.
“We’re helping an industry that we like. We’re spending money to support the things the government wants to support,” Albrecht said. —Kelly Connelly
