Pew Trust Has Advice For Regulating La. Tax Incentives
A new national report has some suggestions for Louisiana lawmakers struggling to balance the state budget. The Pew Charitable Trusts found that sharing information is key to predicting revenue flow.
Senior researcher Josh Goodman says Louisiana tax incentives should be carefully tracked to make sure they’re not spending more to attract businesses than those companies actually generate. The study released this week says the Louisiana horizontal drilling tax incentives, for instance, have been in effect since the 1990s but really took off in 2008 – taking officials by surprise. The report found they cost just under $1 million in 2008 and soared to $272 million in 2012.
“They can design incentives with performance-based structures where companies only receive the incentives after they create a required number of jobs, or make a required investment," Goodman said. "And so there’s a range of practices states are adopting to try to make the cost of these programs more predictable so that they don’t cause budget challenges.”
He says states have found that tax refunds or transferred credits seem to work for the film industry, because it offers temporary projects with small tax liabilities.
“Whatever amount is the maximum lawmakers feel comfortable spending on the program, that is going to be the maximum that that program can cost," he said.
The report suggests that high-quality information be shared, and temporary caps could be put in place.