Louisiana isn’t the only state looking at ways to solve a looming budget crisis by curtailing tax incentive programs aimed at attracting and retaining businesses.
As The Wall Street Journal reports, corporate-subsidy programs are coming under greater scrutiny in states across the country—from elected officials on both sides of the aisle—because of the significant impact these initiatives are having on governments’ ability to balance the books.
In Michigan, for example, corporate-tax incentives helped jump-start the state’s lagging economy, but now those same curative measures are hurting the state’s budget. During the past two decades, Michigan promised companies, including its fabled car makers, more than $10 billion in corporate incentives. These subsidies are fueling a $325 million shortfall in the state’s general fund this fiscal year after a pair of tax credits were unexpectedly cashed in a few months ago.
Republican Michigan Gov. Rick Snyder on Wednesday slashed more than $100 million in state department spending to help plug the state’s budget gap. He also proposed $500 million in additional cuts through 2017, his staff confirmed Wednesday evening.
In Oklahoma, where officials are grappling with a $300 million budget gap, Jeff Hickman, a Republican and speaker of the state House of Representatives, is calling for greater scrutiny of the $1.7 billion he says the state gives away each year on tax credits, incentives and exemptions. Read the full story (subscription may be required).
Here at home, Gov. Bobby Jindal told Daily Report on Wednesday that his administration is working on a plan to help lessen the blow of next year’s anticipated $1.6 billion shortfall—adjusting tax credits that are in excess of the amount of taxes owed.
Jindal, who presents his budget to the Legislature later this month, declined to estimate how much this new approach might raise revenues, but he suggested it would help mitigate some of the damage to dramatic cuts that are anticipated in higher education and health care.
“We’re working on solutions to help protect higher education and health care,” Jindal said, following remarks at the groundbreaking of the Water Campus. “We’re talking about tax credits and rebates that go above and beyond a company’s actual tax liability.”
Jindal said he has asked Department of Revenue Secretary Tim Barfield and Louisiana Economic Development Secretary Stephen Moret to look at expenditures so “we can achieve additional budget savings and continue to help protect higher education and health care. This is incredibly important. We’ve made great progress in recent years.”
