Editor’s note: This is the third in a series about findings from the 2015 Louisiana Survey.
Incentives that attract business but cost the state revenues are at the center of this year’s budget controversies and are generally supported by adults in Louisiana, according to the latest installment of LSU’s 2015 Louisiana Survey.
But Louisiana residents voiced a stronger preference for programs that reduce the amount of taxes owed rather than those programs where the state has to write a check.
It’s those programs, called “refundable tax credits,” that Gov. Bobby Jindal wants to change in order to raise about a half-billion dollars for a state treasury that is short $1.6 billion in revenues. His plan — which would require changes in a number of tax laws — would be to apply a credit’s proceeds to what the taxpayer owes the state and then keep the rest. In the current system, the state “refunds” the amount over the tax liability in the form of a check.
Lawmakers are more intently looking at rolling back the benefits of a wide array of tax credit programs because the cost to the state is growing uncontrollably. But Jindal says that while legislators should look at the tax credit programs, he’ll veto any bill that does away with the incentive without cutting the same value of spending elsewhere in the budget.
Because of the many legal hurdles that have to be cleared before “refundable tax credits” could be turned into “nonrefundable tax credits,” a lot of legislators are skeptical Jindal’s plan will work.
In addition, large swaths of the business community, including the powerful Louisiana Association of Business & Industry, local governments, the solar industry and others are poised to oppose the idea unless the legislation accomplishing it is just so.
“These programs are getting more and more scrutiny from lawmakers as they look for long-term solutions to the state’s budget shortfalls,” said Michael Henderson, research director of the LSU Public Policy Research Lab, who is in charge of putting together the annual poll that charts what Louisiana adults are thinking about issues of the day.
“However, if they want to curb these programs, they are going to have to really work to make the case to the public. As of now, most of the public sees these incentives as good for the state,” Henderson said in a prepared statement.
Even when told of the specific arguments raised by critics, Louisiana residents voice support for the tax incentives that attract businesses to the state, according to the annual survey that is sponsored by LSU’s Manship School of Mass Communication and The Reilly Center for Media and Public Affairs.
Almost three out of every four respondents interviewed said they supported reducing taxes to entice businesses to locate in Louisiana, the survey shows. A smaller majority — 55 percent — is agreeable to using state government funds to pay the businesses as an economic development incentive.
Both Democrats and Republicans support reducing state taxes on businesses as an economic development tool, but the findings indicated a divide based on partisanship about whether to pay public funds to private businesses.
Republicans remain supportive of these programs even when the programs are criticized on the basis of costs or effectiveness.
Sixty percent of the Democrats support these incentives when told about direct costs to the state budget, but their support drops to 48 percent if they are told that incentives may go to companies that fail to create jobs.
To execute the survey, LSU’s Public Policy Research Lab conducted live interviews with 980 adult residents across the state, calling on landlines and cellphones. The total sample has a margin of error of plus or minus 3.1 percentage points.
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