Business lobby opposes proposed changes to Louisiana Quality Jobs incentives – Louisana Illuminator

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The Louisiana Economic Development agency is proposing to change a state incentive that gives companies an annual rebate on a portion of their payroll and sales taxes, and two prominent business groups think it’s a bad idea.
The LED’s Quality Jobs program refunds qualifying employers up to 6% of their gross payroll for new jobs for up to 10 years. Additionally, the business can receive a state sales tax rebate on capital expenditures or a 1.5% project facility expense rebate. 
One of the proposed rule changes would tighten one of the factors that LED uses to calculate the number of new jobs. In order to determine that number, LED first has to establish a company’s employment baseline, which under current rules is the median number of employees in the four-month period before its Quality Jobs contract took effect. LED is proposing to change this “look-back period” from four months to a full year. 
Lobbyists from two prominent business organizations, the Louisiana Association of Business and Industry (LABI) and the Louisiana Industrial Development Executives Association (LIDEA), spoke against the proposal Thursday at an LED hearing on the Quality Jobs changes.
“We would like to remain consistent but if you force us to move, we prefer six months instead of 12,” LIDEA lobbyist Rhonda Reap-Curiel said.
Given the labor shortage driven by the coronavirus pandemic, Reap-Curiel said LED would not get a true economic picture of a company with a 12-month look-back period. 
In 2020, state lawmakers passed a law to allow COVID-19 impacted retail stores, hotels and restaurants with no more than 50 employees to participate in the Quality Jobs program through June 2023. Those industries are not otherwise eligible. 
The median employment baseline excludes the months with the highest and lowest number of employees, so the current number actually comes from just two of the four months. The proposed change would likewise draw a baseline number from 10 of 12 months. 
The baseline needs to be maintained in any year for which the company requests a payroll rebate. A lower number is typically easier for a company to maintain and could lead to more payroll rebates from the state. Although the new rule wouldn’t necessarily lead to inaccurate assessments of job growth, it could lead to fewer rebates.
“This is one of the more important programs you have that attracts business to the state,” LABI lobbyist Jim Patterson said. “I feel it’s very important that when we make these adjustments, however minor they might seem, we always keep in mind the goal of the program.”
Last year, the Illuminator reported that for more than a decade the New Orleans Pelicans have been receiving millions in Quality Jobs rebates annually by counting the NBA team’s roster positions as newly created jobs with average salaries of $608 per hour. Because rebates are calculated as a percentage of the franchise’s total payroll for the new jobs, the basketball players’ lucrative salaries have allowed the team to collect $3.65 million annually, one of the highest rebates of all participants in the program.
A 2020 performance audit by the Louisiana Legislative Auditor found the state’s Quality Jobs program has had a negative return on investment, averaging 5 cents for every dollar the state spends on the program.
The proposal has about a year to be amended and will require a legislative hearing before it is finalized.
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by Wes Muller, Louisiana Illuminator
March 5, 2022
The Louisiana Economic Development agency is proposing to change a state incentive that gives companies an annual rebate on a portion of their payroll and sales taxes, and two prominent business groups think it’s a bad idea.
The LED’s Quality Jobs program refunds qualifying employers up to 6% of their gross payroll for new jobs for up to 10 years. Additionally, the business can receive a state sales tax rebate on capital expenditures or a 1.5% project facility expense rebate. 
One of the proposed rule changes would tighten one of the factors that LED uses to calculate the number of new jobs. In order to determine that number, LED first has to establish a company’s employment baseline, which under current rules is the median number of employees in the four-month period before its Quality Jobs contract took effect. LED is proposing to change this “look-back period” from four months to a full year. 
Lobbyists from two prominent business organizations, the Louisiana Association of Business and Industry (LABI) and the Louisiana Industrial Development Executives Association (LIDEA), spoke against the proposal Thursday at an LED hearing on the Quality Jobs changes.
“We would like to remain consistent but if you force us to move, we prefer six months instead of 12,” LIDEA lobbyist Rhonda Reap-Curiel said.
Given the labor shortage driven by the coronavirus pandemic, Reap-Curiel said LED would not get a true economic picture of a company with a 12-month look-back period. 
In 2020, state lawmakers passed a law to allow COVID-19 impacted retail stores, hotels and restaurants with no more than 50 employees to participate in the Quality Jobs program through June 2023. Those industries are not otherwise eligible. 
The median employment baseline excludes the months with the highest and lowest number of employees, so the current number actually comes from just two of the four months. The proposed change would likewise draw a baseline number from 10 of 12 months. 
The baseline needs to be maintained in any year for which the company requests a payroll rebate. A lower number is typically easier for a company to maintain and could lead to more payroll rebates from the state. Although the new rule wouldn’t necessarily lead to inaccurate assessments of job growth, it could lead to fewer rebates.
“This is one of the more important programs you have that attracts business to the state,” LABI lobbyist Jim Patterson said. “I feel it’s very important that when we make these adjustments, however minor they might seem, we always keep in mind the goal of the program.”
Last year, the Illuminator reported that for more than a decade the New Orleans Pelicans have been receiving millions in Quality Jobs rebates annually by counting the NBA team’s roster positions as newly created jobs with average salaries of $608 per hour. Because rebates are calculated as a percentage of the franchise’s total payroll for the new jobs, the basketball players’ lucrative salaries have allowed the team to collect $3.65 million annually, one of the highest rebates of all participants in the program.
A 2020 performance audit by the Louisiana Legislative Auditor found the state’s Quality Jobs program has had a negative return on investment, averaging 5 cents for every dollar the state spends on the program.
The proposal has about a year to be amended and will require a legislative hearing before it is finalized.
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Wes Muller traces his journalism roots back to 1997 when, at age 13, he built and launched a hyper-local news website for his New Orleans neighborhood. In the years since then, he has freelanced for the Times-Picayune in New Orleans and worked on staff at the Sun Herald in Biloxi, WAFB-9News CBS in Baton Rouge, and the Enterprise-Journal in McComb, Mississippi. He also taught English as an adjunct instructor at Baton Rouge Community College. Much of his journalism has involved reporting on First Amendment issues and coverage of municipal and state government. He has received recognitions including McClatchy’s National President’s Award, the Associated Press Freedom of Information Award, and the Daniel M. Phillips Freedom of Information Award from the Mississippi Press Association, among others. Muller is a New Orleans native, a Jesuit High School alumnus, a University of New Orleans alumnus and a veteran U.S. Army paratrooper. He lives in Ponchatoula, Louisiana, with his two sons and his wife, who is also a journalist.
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Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site.

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