The Louisiana Economic Development did not report the economic impact of three incentive programs in its 2017 Unified Economic Development Budget Report, resulting in the state spending roughly $18.7 million on these programs without understanding how it helped the state’s economy, according to the Louisiana Legislative Auditor.
Auditors reviewed LED’s Retention and Modernization Tax Credit, the Mega Project Fund and the Rapid Response Fund and found that in 2017, LED didn’t report the economic impact or the impact on state tax revenues for the three programs.
Further, according to the audit, LED reported only estimated numbers for the amount of associated payroll and capital investment data elements for the Retention and Modernization program. Under state law, LED is required to report actual results if available.
In response to the findings, LED says it would reissue the 2017 UEDBR to show the actual numbers for all elements of the R&M program.
Auditors suggest the state agency consider using performance data to revise its initial forecasts in the UEDBR for the number of jobs, payroll amounts and capital investments each company creates. Using actual performance data would allow LED to improve the accuracy of the forecast amounts reported in the UEDBR, the audit reads.
“Because LED did not revise its forecasts using actual data, the numbers in the 2017 UEDBR for the Rapid Response Fund and Mega Project Fund programs may have been overstated or understated for the number of jobs created and the amount of incentives to be paid in future years,” the audit reads.
Going forward, LED says that the Louisiana Department of Revenue will give the Legislature a comprehensive return on investment analysis for all tax incentives for which revenue loss was $1 million or more in the previous year.