The Louisiana treasury has continued to pay out more to corporations in tax rebates this year than it has collected from them in tax receipts, the latest figures show.
The state had paid out $152 million more to corporations than it had collected in corporate income and franchise taxes through March, according to the Department of Revenue.
“A negative number is always a concern,” said Jay Dardenne, who as commissioner of administration drew up a budget that closes a $750 million budget deficit before the regular session ends on June 6 by making deep cuts in funding for higher education and safety-net hospitals.
State officials have projected that corporate tax collections will reach $359 million through June 30. That would require a $511 million turnaround over the next three months.
“That will be tough,” said Jim Richardson, an LSU economics professor, who noted that corporate tax collections are usually highest in April. “We really need a good, positive month in April.”
Any shortfall in corporate tax revenue would require cuts in government programs or offsetting increases in fees because the Legislature cannot raise taxes during the regular session this year.
The tax giveaways to businesses seem likely to spur further scrutiny of the dozens of tax breaks in the tax code.
Gov. John Bel Edwards wants to call the Legislature into a second special session in June to ask lawmakers to raise taxes to prevent the deep cuts in his budget.
“That (effort) begins with identifying ways to restructure our state’s broken tax system and eliminate the tax giveaways that are costing our state too much money,” Edwards wrote in an op-ed piece published in The Advocate on Sunday.
Edwards has asked a task force studying the state’s budget and tax system to issue tax recommendations to lawmakers before the special session begins.
A study released last year by the Department of Revenue found that of the 87 largest companies that filed corporate tax returns in 2012, only one-quarter of them paid corporate income taxes in Louisiana, even though 96 percent of those that make financial reports public said they were profitable.
Of the 87, only half paid corporate franchise taxes in Louisiana.
“Many companies received refunds from refundable tax credits that exceeded their income and franchise liability,” the report found.
While corporate tax collections are down by $152 million so far, they were up by $133 million through March a year ago, a worrisome sign for policymakers.
Greg Albrecht, the state’s chief economist, finds a silver lining in this year’s March numbers. While down by $152 million, corporate tax collections through February were even deeper in the red, $218 million.
“March is typically a month when we see positive numbers,” Albrecht said. “It appears to be moving in the right direction. But it’s still a cross-your-fingers situation.”
Even if the state collects the $359 million by June 30, that figure would be down from a projection in November that the state would collect $588 million in corporate income and franchise taxes this year.
Albrecht blames the decline in collections on three factors. One is a three-year tax amnesty program that, he said, mostly causes companies to advance tax payments they would have paid in later years after settling their disputes with the state. Two other factors, he said, are the decline in oil prices and the appreciation of the dollar, which has dampened exports.
Follow Tyler Bridges on Twitter @TegBridges.
For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/