Each year, BRAC, with input from its board and investors, develops a legislative agenda of bills and issues for which the organization will advocate or oppose. Keeping with BRAC’s mission of leading economic development in the Capital Region, these legislative actions are meant to improve the economic and regulatory environment of the region. They are also intended to address BRAC’s key strategic pillars of diversifying the regional economy, transforming the region’s quality of life, elevating the region’s external image, and cultivating the region’s talent. BRAC’s legislative work in 2021 will fall under the following areas.
Like its fragmented sales tax system, Louisiana’s overall tax code puts the state at a disadvantage in competition for talent and business development against neighboring states. On the books, Louisiana has high income tax rates compared to neighboring states that have eliminated or reduced their income tax. In reality, our income taxes are not much higher, but we achieve parity via deductions, exemptions, and credits – none of which are clear to people or companies considering Louisiana as a place to call home or do business.
Louisiana rates appear higher because we allow the complete deduction of federal income taxes (and are one of only three states that do so). By eliminating federal deductions, Louisiana can lower its rates and clarify its competitiveness with nearby states. There is an added local benefit of eliminating federal deductibility: eliminating dramatic revenue swings caused by ever-changing federal tax policy. Louisiana’s budget should be decided by Louisiana leaders, not by the U.S. Congress.
The income tax and federal deductibility are not the end of the changes needed. Much like the state income tax, Lousiana’s franchise tax positions Louisiana as an outlier. Franchise tax is a tax on all corporations which earn income from state-based sources. The tax is a direct hit to businesses without a regard to profit, making it more challenging for businesses to grow and thrive. Eliminating the franchise tax is a needed step forward; however, it is critical we do so in a way that protects healthcare and higher education.
The tax system in Louisiana is a mess and needs to be reformed to stabilize the state’s budget and set up Louisiana’s business to compete against other states. Louisiana’s tax system currently ranks 44th by the Tax Foundation 2021 State Business Tax Climate Index. With common-sense reforms, it is possible to move up that ranking to the high 20s, spur economic investment, and make the state more attractive to talented people choosing where to live.
Louisiana is habitually ranked as one of the worst states for sales tax in the country, 49th this year by the Tax Foundation. Not only are our sales taxes among the highest in the country, but Louisiana also operates a random and confusing collection system that disincentivizes doing business in more than one parish, hurting small businesses. There are more than 50 local tax collectors across the state, each with different rules that must be followed by every business in their jurisdiction. For small and large businesses alike, this translates to increased cost and complexity and makes it harder to do business in multiple parishes. That is why BRAC has long supported the call for a single, unified sales tax collection system, and this session is a prime opportunity.
The unnecessary complexity of the fragmented sales tax system damages the state rankings and makes it hard to do business. Further, it puts smaller businesses at a disadvantage: complexity is a subsidy, so businesses that can afford to navigate the complicated system have a leg up on those that do not. By enabling this system of tax collection, Louisiana’s legislature picks winners and losers.
Businesses operating in multiple parishes deal with multiple sales tax collectors and multiple interpretations of the over 150 existing exemptions to our sales tax code. Louisiana and Colorado are the only states with systems that are so dramatically decentralized. Businesses must invest more time and resources in accounting for tax collection in Louisiana than in competing states. BRAC will continue its push to fix our broken sales tax system through uniformed centralized collections.
The state’s transportation infrastructure funding crisis prevents regional businesses from growing, negatively impacts quality of life because of hours that people and goods spend in traffic, and increases the cost to do business and live via higher insurance and fuel prices. With the federal government looking at an infrastructure package and state legislative elections a few years away, now is the best time to act. BRAC is part of a large and varied coalition from across the state pushing for more funding for transportation infrastructure.
Commuters in the Baton Rouge Area spend 55 hours (about two and a half days) in congestion annually and burn an extra 25 gallons of gas per year because of the congestion on our roads. This puts the region third worst among mid-sized U.S. cities for congestion. This congestion not only decreases time spent with family and friends, but also has a real economic impact on business. The excess time in traffic limits the number of calls a plumber can handle daily or deliveries a florist can make each afternoon, cutting into every business’ bottom line. The amount of time it takes to move workers and products artificially limits our region’s economic growth, as raw products take too long to get to manufacturers, and finished products take too long to get to consumers.
The issue does not just effect business owners; the Texas A&M Transportation Institute says that traffic in Baton Rouge costs the average area commuter an extra $1,010 annually as compared to commuters in similar areas. Add that cost to the more than full work week we spend sitting on congested roadways, and the impact on families and household budgets becomes astoundingly clear. The cost of inaction is far greater for the state’s commuters in terms of time and maintenance than finally addressing the lack of infrastructure funding. We cannot fail now to address the need for better transportation infrastructure, as doing so guarantees even more wasted money and time.
BRAC will strongly advocate for continued progress toward a new Mississippi River bridge, fully funding the I-10 widening through the heart of Baton Rouge, and commuter rail between Baton Rouge and New Orleans. Improving infrastructure will give us time back with our families, put cash back in our wallets, and grow jobs and the economy.
To ensure that Louisiana’s existing economic development toolkit does not put the identities of Louisiana citizens at risk, BRAC will lead a bill that extends to the Louisiana Department of Economic Development those same confidentiality provisions for employee data as are offered for employee data disclosed to other state agencies. Employee data such as partial social security numbers, salaries, and addresses, which are often disclosed as a requirement of LED cooperative endeavor agreements (CEA), are subject to public records requests made to LED. Protections already exist for that same type of employee data if requested from the Louisiana Department of Revenue or Louisiana Workforce Commission. This imbalance puts employee data and companies at risk.
Businesses are placed in a difficult position: enter into a project-critical CEA and risk employee data, or ensure the privacy of employee data and miss opportunities to grow local economies. Louisiana has already deemed this data worthy of protection when it resides with other state agencies, it should extend those protections to economic development activity as well.
The Capital Outlay process is a tool that local entities use to gain state funding for projects critical to local areas. Along with supporting ongoing projects to improve transportation infrastructure, BRAC will strongly advocate for funding a few specific regional priorities. These projects are vital to improving the quality of life of the Baton Rouge community. Acquiring funding will be a critical step in the continued efforts to revitalize the area.
- The LSU/City Park Lakes revitalization is a centerpiece of the Baton Rouge community. These areas attract residents and visitors alike to enjoy the outdoors. The lakes are a gateway to LSU, and are often the first image students, families, and others experience of the university. Keeping the lakes and surrounding areas healthy is critical to student recruitment and retention and to the quality of life of people living in and visiting the area. The lakes are a diverse community gathering place, a bright spot in our outdoor portfolio, and must be preserved for generations to come.
- The Capital Area Groundwater Conservation Commission groundwater monitoring is less visible, but no less critical, to retaining the region’s unique advantages. Contaminated groundwater will raise costs for both residents and businesses to acquire clean water. The Southern Hills Aquifer, if monitored and maintained properly, will continue to provide the community with some of the cleanest water in the country for generations. Ensuring its safety and longevity will also ensure economic success and growth for the future.
- Finally, to support talent development in the region, BRAC will advocate for inclusion of funds for our higher education institutions. Baton Rouge Community College hopes to build a new and expanded nursing/allied health training facility, as its program has outgrown its home. In doing so, it plans to bring that facility to the Mid-City campus, furthering the revitalization of the area and providing an additional 1,000 graduates. LSU is seeking funding for a new science building, for which it has raised substantial private dollars and is looking for state support. Southern University is requesting funds for a new building for their business school. There are numerous other projects for the region’s higher education institutions, but these are top of the list.
For far too long, North Baton Rouge and its residents have experienced shrinking economic opportunities. To spur economic growth and capitalize on planned revitalization projects, BRAC, in conjunction with community partners, will advocate for the creation of Economic Development Districts (EDD) in North Baton Rouge. These districts, which will not impact existing taxes levied by the city-parish, will help to redevelop an area of the city that is poised and prepared for a renaissance.
BRAC knows that reinvestment in disinvested communities is critical to the success of Baton Rouge’s economy. Cities and regions that embrace diversity create an atmosphere of openness that improves their competitiveness in attracting and retaining businesses, talent, clients and customers. Baton Rouge lags its peer cities in terms of economic inclusion. Taking the step of creating EDDs in North Baton Rouge will encourage greater levels of successful Black business ownership, foster wealth creation in Black communities, and drive greater community reinvestment and greater access to employment. Growing areas around these EDDs will help the Baton Rouge economy be more inclusive and bring new growth to areas that have been left to stagnate for too long.
A driving force in economic development is access to high-quality talent. BRAC advocates strongly for workforce development improvement and education reforms. The cost of education and training programs are increasing at staggering rates, making it harder for Louisiana’s working-aged adults with high school diplomas or less to further their education and careers. However, the training that comes with even short-term post-secondary credentials can be life changing. The average wage gain for Louisianans after earning a short-term credential is more than 19%, making the potential impact of such an achievement on a large scale transformational for the state’s economy and people. BRAC is supporting legislation driven by the Louisiana Community and Technical College System to increase access to these types of credentials. The MJ Foster Promise Program, which the bill would create, will expand financial assistance to adult learners in credit and non-credit programs in targeted industry sectors that lead to high-quality jobs. This program will allow adult learners to gain financial assistance for short-term workforce training with recognized credentials, when those credentials have been flagged by regional economic development organizations as in-need.
In K-12 education, BRAC will keep its eye on workforce development. During the 2020 regular session BRAC led passage of a resolution to allow data sharing between state workforce and education agencies, with an aim of analyzing whether high school students graduating with a career credential are entering the workforce or post-secondary education using or continuing learning in their field. House Education Chairman Ray Garafalo will lead a bill this year, with backing from the Board of Regents, to allow for the data sharing studied as part of BRAC’s 2020 resolution. With it, the Department of Education, Louisiana Workforce Commission, and Board of Regents will be able to evaluate the state’s career and technical education programs to determine if they are leading students to high-growth, high-wage jobs as intended. These metrics are critical to determine if the state is educating students to succeed. Without this information it is only conjecture.
Gaining access to capital is critical to new businesses and a struggle for many minority and women owned businesses. The success of the Baton Rouge Area economy is inextricably linked to the success of its small businesses, particularly the region’s ability to facilitate entrepreneurship and provide the necessary resources for these businesses to grow. BRAC will support efforts to use recent increases in federal funding to enhance capital opportunities for early stage and high-growth-potential businesses. Most small business and startup owners applying for financing due so to expand their business or pursue a new opportunity, and their inability to obtain sufficient financing hinders their capacity to grow, create jobs, and stay competitive with e-commerce and big-box retailers. Helping grow early stage businesses will lead to more growth and prosperity in the state of Louisiana, and if done properly, will return outstanding return on investment to the state.
The American Rescue Plan, passed this year by Congress, allocates about $3.2 billion to the state of Louisiana. BRAC supports using those funds to replenish the state’s Unemployment Trust Fund, which required a loan from the federal government to continue to pay benefits. Paying off this loan and replenishing the fund will prevent the need to reduce benefits to the unemployed and raise taxes on businesses. A year ago the fund had over $1 billion in it, before being decimated by the pandemic. The other priority for the use of these funds is infrastructure. Using some of the $3.2 billion in addition to another $180 million already allocated in the bill for infrastructure can help advance priority projects. The state should not waste these funds, as it is rare to get this amount of money from the federal government.