Louisiana has a long history of enormous corporate giveaways. A decade ago, the Louisiana Coalition for Tax Justice compiled the state’s property tax exemption records for the 1980s and found that they added up to $2.5 billion, with the largest tax breaks going to giant petrochemical companies and utilities. Almost three-quarters of the exemptions created no new permanent jobs. Many of the companies also received enterprise zone tax rebates and credits. One of these, Shell Oil, collected credits for hiring new workers to replace seven employees killed in a 1988 plant explosion.
The giveaways continue today. The state is awarding nearly $1 billion a year in industrial property tax exemptions for existing facilities and is willing to spend big to attract new ones. (Unlike other states, Louisiana’s property tax abatements are centrally controlled by one state board, not by county or parish bodies.) In 2010 the state agreed to make available $600 million in tax-exempt bonds and some $200 million in other subsidies for an iron-making plant being built by Nucor (see below). The year before, an $82 million subsidy package was put together for V-Vehicle, a little-known start-up trying to break into the automobile business (see below).
Apart from the industrial property tax exemptions and enterprise zones, key subsidy programs include the Quality Jobs program, which provides investment tax credits and rebates for payroll and sales taxes; and a film production tax credit that now costs more than $100 million a year.
The good news is that the state is taking subsidy accountability more seriously, beginning with disclosure. Only a few years ago Louisiana did not disclose any recipient data online. Now the state is publishing annual reports with lists of recipients for some programs, and in 2010 it created a database called FastLane that includes recipient information for four programs but lacks the subsidy amounts available in the annual reports. In our survey of five major programs, we found that the annual reports and FastLane cover three of them. The public is still in the dark on which companies are receiving tax credits for equipment purchases and film production.
Key Subsidy Programs
|Subsidy Program||Recent Annual Cost||Online Recipient Disclosure||Recipient Disclosure Score*||Job-Creation/Job-Quality Score**||Monitoring/Enforcement Score***|
corporate income and franchise tax credits tied to the hiring of workers from targeted groups
|$109.6 million (2010)||69/100||38/100||57/100|
Industrial Tax Exemption Program
longstanding and controversial property tax abatements awarded by the state for industrial investment
|$745.3 million (2009)||76/100||20/100||28/100|
Motion Picture Investor Tax Credit
corporate income tax credit for motion picture investment
|$164.2 million (2010)||
Purchases of Manufacturing Machinery and Equipment Exemption
sales and use tax exemptions
|$18 million (2010)||
Quality Jobs Program
cash rebates for payroll costs and for sales and use taxes; also investment tax credits
|$87.8 million (2010)||69/100||93/100||87/100|
* The score is derived from the Good Jobs First report Show Us the Subsidies (December 2010).
** The score is derived from the Good Jobs First report Money for Something (December 2011).
*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).
Major Subsidy Deals
After losing Germany’s ThyssenKrupp $3 billion steel mill to Alabama, officials in Baton Rouge were excited to learn in 2008 that U.S. steelmaker Nucor was considering Louisiana for a $2 billion plant of its own. The state put together a subsidy package that appeared to be to Nucor’s liking, but an official announcement was postponed as the company evaluated whether market conditions warranted moving ahead with the project. In July 2010 the state gave Nucor a big incentive to proceed by arranging to make available $500 million (later increased to $600 million) of Louisiana’s remaining Gulf Opportunity Zone tax-exempt bonding capacity (the program created in 2005 for states hurt by Hurricanes Katrina and Rita).
In September 2010 Nucor announced that it would move ahead on a $750 million iron-making plant with 150 jobs to be located in St. James Parish. This was the first phase of a revised $3.4 billion project. In addition to the bonds, the state agreed to provide up to $200 million in performance-based grants and a 20-year local property tax exemption if the company completed the entire project. For the first phase, Nucor was also offered $30 million in cash and a $30 million forgivable loan. (Key sources)
V-Vehicle/Next Autoworks (2009)
In June 2009 officials in Louisiana arranged for $82 million in state and local funds to a little known start-up company with plans to break into the automobile business. San Diego-based V-Vehicle said it wanted to build a next-generation fuel-efficient car at a vacant headlight plant in the northern Louisiana city of Monroe. The company declined to provide many details about the car but said that its investors included veteran venture capital firm Kleiner Perkins Caufield & Byers and oilman-turned-renewable-energy-advocate T. Boone Pickens. Most of the state’s $67 million share of the subsidy was made contingent on V-Vehicle’s success in raising another $350 million, most of which was expected to come from a U.S. Department of Energy Advanced Technology Vehicle Manufacturing loan.
Ouachita Parish also decided that the company would have to return the $15 million local contribution (which was to be funded through a property tax increase) if it did not meet those additional capital requirements. The plan suffered a setback in March 2010 when the Energy Department turned down the loan bid, but the DOE allowed V-Vehicle to revise and re-submit its application (which it did in May 2010). In the meantime, the company reimbursed the state for the $6.2 million it had paid toward the project. In October 2010 the company changed its name to Next Autoworks. In November 2011 the company withdrew its DOE application, and the project appeared to be dead. (Key sources)
Wal-Mart in Louisiana
- At least 20 Wal-Mart locations have received subsidies worth about $96.5 million in Louisiana.
- At least 1 Wal-Mart location in Louisiana has challenged its property tax assessment.
- Many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope. These workers often turn to taxpayer-funded health programs such as Medicaid. Louisiana is among those states that have not disclosed data on the employers with the most workers or their dependents enrolled in such programs.
- Wal-Mart receives about $5.4 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers.
For more information, see the Louisiana page of Wal-Mart Subsidy Watch.