Advocate staff writer Gordon Russell and columnist Stephanie Grace answered readers' questions Monday about the eight-part "Giving Away Louisiana" series.
Here are a few questions and answers from the chat.
Does this series make it clear that Jindal was pushing his presidential platform at the expense of Louisiana taxpayers?
Grace: Everyone I talk to in Baton Rouge thinks that's the case. It's amazing how many insiders say they're watiing for him to go so they can at least try to deal with the state's budget issues, higher ed funding, and certainly whether these incentives should be adjusted or eliminated. Even his close allies say that.
Russell: I’d hesitate to go that far, but certainly it appears that Gov. Jindal was unwilling to consider certain measures (even killing tax-credit programs seen as boondoggles) in order to honor a pledge that seems aimed at keeping his presidential hopes alive.
Without the tax breaks, no film industry. So, what's the net loss in tax dollars?
Russell: Agreed that without the tax credits, the industry (or almost all of it) goes away.
The most recent estimate of the net loss to the state treasury from was about $168 million a year (that was for fiscal year ending 2012; and the number has probably gone up since). That number was in a study done by economist Loren Scott in April 2013. In short, Scott found the state put $218M into the credits and got back about $50M in sales. (He estimated local governments got another $30M or so in taxes, though local governments don’t fund the program).
Y'all agree that higher ed took the brunt of the punishment thanks for these incentives remianing in play?
Grace: Yes, because higher ed is not protected in the state Constitution the way many if not most other areas are. It's a huge structural problem, but nobody seems inclined to take on a full constitutional rewrite right now.
Russell: I would add that other things also probably took a hit, like health care, but there are so many variables influencing how much the state spends on health care that it's hard to track year over year...
Which of the tax programs y'all wrote about is the most dangerous to the state's future?
Russell: Hard to say which one is most “dangerous.” The one that actually has the biggest negative fiscal impact, right now anyway, is the business inventory tax refund. It’s pretty obscure but it costs the state more than $400 million a year and is expected to keep going up steeply. At the same time, it’s a tricky problem to solve because local governments depend on the money they get from the tax (which is assessed locally, paid by companies, and then refunded to the companies by the state). You could get rid of the refund program, which would save the state lots of money, but it would leave locals in the lurch (unless they passed a property tax increase). The other thing I should note is that lots of these programs don’t seem very expensive when they're passed (like solar) but then they grow beyond anyone's wildest dreams after they're in place. Also happened with horizontal drilling.
The Advocate mentioned in a column on this issue that Louisiana is experiencing unprecedented growth and is better economically than it has ever been before. Why should we try to stop this?
Grace: Nobody's talking about stopping them. The question is whether all that growth is helping the state's bottom line. The evidence is that it isn't. Certainly individuals are benefiting and that's good, but it seems that well-structured programs would also support state needs.
Why could the legislature never rise up against Jindal and make it known these tax incentives were bad for the state? Is it really partisan politics, laziness, a little of both?
Grace: They have in small ways. Remember a few years ago when Jindal vetoed a three or four cent cigarette tax extension because it violated the Americans for Tax Reform pledge? They came back and attached it to a popular (but unrelated) constitutional amendment on TOPS. The difference? No gubernatorial action required.
Which of the incentives you profiled has the greatest chance of being curtailed -- enterprise zone program?
Grace: Probably. That seems to be the one that's attracted the most criticism, and understandably so. Of course, the solar tax incentive is already set to expire. I suspect that has something to do with the state's overall attitude toward energy.
Russell: Think those are the big ones; I think film could also come in for some turbulence. A lot of legislators outside the big cities, understandably, don’t think they get much of the benefit of the film program.