The Louisiana Legislative Auditor says the state’s quality jobs tax incentive program may not actually be generating jobs.
The new report says the 59 projects started under the Quality Jobs Program in 2011 and 2012 generated over $10 billion in direct and indirect household income in the state. Yet, auditors conclude that the majority of that $10 billion could have been put out even without the incentive program.
In their response, the Louisiana Economic Development, which heads up the quality jobs program, strongly rebukes the report’s methodology.
“LED expressed grave concerns regarding the assumptions and the methodology used to determine the economic impact of the QJ program,” LED Secretary Don Pierson says in his response.
Pierson says the agency employed an independent third-party, Regional Economic Modeling Inc., to conduct an “unbiased analysis” of the program. That outside analysis showed the program generates $78 million to $105 million a year in state tax revenue, has an employment impact of 36,000 to 49,000 jobs, personal income impact of $1.9 billion to $2.6 billion a year, and annual GDP impact of $4.3 billion to $5.6 billion. The outside report also says the quality jobs program generates a return on investment between $1.10 and $1.72.
Pierson goes on to say that the Legislative Auditor’s Office has failed to fulfill its statutory duties by not using the same “proven, and easily accessible methodology” employed by REMI.
“Here, LLA’s function has been fulfilled by REMI, an out of state company, at additional taxpayer expense, because LLA could not produce a report that fulfills its statutory duties,” he says.
The state auditor’s report also states it’s possible the program generates more in household income than it costs the state. But it still says the program is a “net loss” for the state treasury.
It suggests that by capping the sales and use tax rebate and the facility expense rebate, the state could have saved a net $84.8 million on those 59 projects.
Other findings in the auditor’s report include:
• Thirty-five percent of quality jobs investment spending went to Louisiana-based businesses.
• From 2011 to 2018, the Department of Revenue paid $669,912 in rebates to six companies for creating 155 jobs, but those companies did not meet or document their third-year employment numbers.
• Of the 28,160 total proposed jobs, only 13,210 jobs have been created since the program’s inception in 1995.
• Since the Legislature repealed the requirement for a cost-benefit analysis for each project in 2002, the number of approved Quality Jobs projects has increased by over 600%.
