Business Report
The 2015 legislative session may not go down in history as the single-worst session for the state’s business community, but it was one of the worst, according to business leaders who weighed in on the session today.
In a recap of the six-week session, which ended June 11, the Baton Rouge Area Chamber says bills passed to help balance the state’s $1.6 billion budget shortfall have set the state’s business climate back and decreased Louisiana’s overall competitiveness.
“The best we can say is the Legislature increased business taxes less than the governor sought to do,” says the BRAC Legislative Review. “While some positive steps were taken and some much worse outcomes were avoided … describing the session as a missed opportunity would be an exercise in understatement.”
Louisiana Association of Business and Industry President Stephen Waguespack puts it this way: “You’re talking about $2.2 billion over five years that will be falling primarily on the backs of business. By no means can you call that a successful session.”
The biggest problem with the session, from the business community’s perspective, is a series of legislation that reduces business tax credits, exclusions and rebates. Among other things, those bills will cut the digital interactive media and software tax credit, angel investor tax credit and the inventory tax credit. They will also cap the motion picture tax credit at $180 million a year for the next three years, gut the solar tax credit program, reduce the Corporate Headquarter Relocation Program rebate and limit which businesses are eligible for participation in the Enterprise Zone program.
“The Legislature did not try to balance the state’s economic competitiveness or balance the increase in taxes between business and non-business payers,” BRAC says. “Instead the Legislature primarily sought to enact changes on business in lieu of enacting fairer structural changes to the tax code.”
Waguespack says LABI believes the tax changes have serious constitutional problems and he expects legal challenges to follow, though he says his organization will not be filing suit against the state.
“We are arming our members with as much information as possible and leaving it up to them,” Waguespack says.
Treasurer John Kennedy has said several of the bills to raise taxes have a “excellent chance” of being declared unconstitutional if challenged in court, citing Article 7, Section 2 of the state’s constitution, which says any “new tax, an increase in an existing tax, or a repeal of an existing tax exemption” needs a two-thirds majority from both the House and Senate to become law. However, Louisiana House of Representatives Clerk Alfred “Butch” Speer late last week told the Leaders With Vision group in Baton Rouge that Kennedy is wrong.
“One of the things I do in the Legislature is I defend them in court, and I will tell you today that I will win that case,” Speer said, referring to any possible legal challenge on constitutional grounds. “And I won’t break a sweat to win the case.”
See a video of both Kennedy and Speer’s comments on the issue.
Both LABI and BRAC credit lawmakers with restoring some of Gov. Bobby Jindal’s proposed cuts to higher education funding, but both groups say other ways were possible to restore those cuts without raising taxes on businesses.
One of the high points of the session was the compromise reached over the controversial Common Core educational standards. Business groups had lobbied hard before the session to keep Common Core in place. Waguespack says the compromise that emerged is encouraging.
“We’re cautiously optimistic this will keep the high standards in place,” he says.
LABI will issue a legislative scorecard later this summer. Read BRAC’s complete report on the session.