Louisiana faces a projected $1.6 billion deficit next year, and lawmakers may cut over $1 billion in business subsidies in an effort to balance the budget without raising taxes.
The state’s House Ways and Means Committee began considering a slate of deficit-reducing measures Monday, just days after a Senate committee approved a bill that would slash business tax rebates by over $500 million, The Acadiana Advocate reports.
Earlier this month, Republican Gov. Bobby Jindal gave his final budget address to the state legislature, during which he urged corporate welfare cuts while at the same time disavowing any net tax increases. (RELATED: Jindal to Attempt Massive Tax Credit Overhaul in Final Months)
Jindal’s most notable suggestion, which was included in his 2015 budget proposal, would convert a variety of refundable corporate tax credits into non-refundable credits, which he claims would boost state revenues by $526 million, eliminating roughly one-third of the projected deficit.
After initially balking, lawmakers are apparently ready to get on board with Jindal’s strategy, proposing a slate of bills that would save the state hundreds of millions of additional dollars through cuts to certain business incentive programs. (RELATED: Republicans Rebel Against Jindal Budget Plan)
“This is an opportunity to close some corporate loopholes and exemptions not giving the returns that were expected when they were put in place,” Republican Speaker of the House Chuck Kleckley told The Advocate. “We need to get some of these measures moving through the legislative process to solve the budget hole.”
The Senate’s contribution to the effort is a bill that would repeal the “business inventory tax,” a complex arrangement whereby companies are reimbursed by the state for massive tax liabilities imposed by local governments based on the value of inventory held by companies in those locales.
According to The Advocate, the cost of the program has risen dramatically in recent years, from about $143 million in 2004 to over $425 million in 2014. (RELATED: Jindal Proposes Elimination of Income and Corporate Taxes in Louisiana)
In the House, additional savings would come from efforts to curtail tax benefits for specific industries, including solar energy and film production. HB 276, for instance, reduces the cap on film tax credits from $200 million to just $60 million, producing annual savings that are expected to grow from $140 million initially to over $200 million after 2018.
If all of those measures, including Jindal’s tax credit reform, manage to become law, Louisiana will reduce payments to businesses by well over $1 billion next year, wiping out about two-thirds of its projected deficit.
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