It's been years since legislative packages had so much potential for enhancing economic development efforts.
With the start of the legislative session just around the corner, Gov. Bobby Jindal has presented two legislative packages that have the potential to positively impact economic development efforts more than any other legislation in recent years. LEDA and our regional ally, Acadiana Economic Development, will follow these bills closely once the session is under way. Until then, let's review.
It's been years since legislative packages had so much potential for enhancing economic development efforts.
With the start of the legislative session just around the corner, Gov. Bobby Jindal has presented two legislative packages that have the potential to positively impact economic development efforts more than any other legislation in recent years. LEDA and our regional ally, Acadiana Economic Development, will follow these bills closely once the session is under way. Until then, let's review.
Jindal is proposing some major reforms to the State's K-12 education system. The proposed reforms will allow school systems flexibility to create innovative programs to boost educational attainment, enable parents to become more engaged in their children's education and provide more educational track options for students.
When paired with the economic development legislation he has also presented, these educational reform measures have the potential to greatly impact our ability to grow business in the region. The first thing a business looks for when selecting a new state or city is location. The second is workforce.
Having a quality education system in the state and parish produces a quality workforce which enables LEDA to more effectively attract new businesses and allows for the expansion of existing businesses in the region.
Jindal has also put together a legislative package for economic development that aims to make Louisiana more competitive with other states. Louisiana Economic Development estimates that these four proposals will generate at least 10,000 new direct and indirect jobs in the next five to 10 years.
First, the package proposes that corporate income and franchise taxes, for targeted companies, be based on the amount of in-state sales generated, rather than using the current method of calculation that is based on a combination of sales, property and payroll factors. This calculation method is becoming more common across the U.S. This will not be a completely new concept for the state as this method is currently used for manufacturers and merchandisers. By implementing this method for competitive projects across industries, there is the potential for great growth in the state. Targeted projects will include corporate headquarters, data centers, logistics and warehousing, clean technology, destination health care, R&D operations, renewable energy, and digital media and software development.
The next measure would offer a 10-year property tax exemption to attract companies in targeted sectors with the capacity to generate substantial new growth in jobs, sales and tax revenue. These targeted sectors include corporate headquarters, logistics and warehousing, data centers, clean technology, destination health care, R&D operations, renewable energy, and digital media and software development.
This is an expansion of the Industrial Tax Exemption program already available to manufacturers, either expanding to or building facilities in Louisiana. The exemption would be offered, as it is for manufacturers now, for an initial five-year term with an option to renew for five additional years. This proposal will require the passage of a constitutional amendment by the voters, and parishes would be given the opportunity to opt in or out of the program based on an additional vote by parish governing authorities.
The third proposal would expand on the existing Quality Jobs program that offers a payroll rebate of up to 6 percent for as many as 10 years to companies that create high-quality jobs. The new proposal will create a new incentive - valued at up to 15 percent - that would be offered only in highly competitive site selection processes. As with the other proposals, only specific, high-impact industries will be targeted: corporate headquarters, clean technology, next-generation automotive, aerospace, destination health care, R&D operations, pharmaceuticals manufacturing, and renewable energy.
The final proposal aims to bring more corporate headquarters to Louisiana. A large headquarters office can generate hundreds to thousands of direct and indirect jobs in a region. Under the proposal, the state will offer to significant corporate headquarters projects a 25 percent rebate over five years on qualifying relocation costs to companies that move their facilities to the state. To be eligible, companies would need to pay salaries at twice the average private-sector wage in the parish where they relocate, or at least $60,000 a year.
In the past, I've used this space to write about the need to revamp the Louisiana tax system and the potentially negative impact higher corporate taxes could have on business development efforts. One way the state has been able to overcome the limitations of Louisiana's corporate tax system is to offer businesses one of the most comprehensive incentive packages in the nation, which in some cases can outweigh and lessen a disproportionate tax burden.
With these proposals on the table, we are in position to increase the business friendly environment in Louisiana. Despite today's increasingly global market, most business relocations will still occur between one state and another, not to an overseas location. With that in mind, Louisiana must do everything possible to become and remain competitive for business.
Gregg Gothreaux is president and CEO of the Lafayette Economic Development Authority.