Legislative audit: Lawmakers not getting complete tax incentive picture

Incentives cost the state more than $1 billion last fiscal year

Tax incentive audit

BATON ROUGE, LA (WAFB) - An October legislative auditor’s report indicates managers for 33 of Louisiana’s 78 major tax incentive programs did not submit enough information about return-on-investment (ROI) to be considered “compliant” with legal reporting requirements.

A 2013 law requires department heads to prepare ROI reports and present them to the legislature so lawmakers can determine if certain programs are working or need adjustments. Incentive programs cost the state $1.1 billion in revenue last fiscal year, and the 33 non-compliant programs account for around 10 percent of that figure.

“Every dollar that’s given away is a dollar that could be used to pave a pothole, educate a child, provide healthcare, or any of the important things the state does,” said Louisiana Budget Project director, Jan Moller. “If we’re not going to collect that dollar, what are we getting in return?”

But Moller, along with the Department of Revenue, says not all incentive programs have a measurable ROI. Some aim to make life easier for Louisianans or help to attract businesses, which are two factors difficult for economists to quantify.

“We’re talking about accountability,” said Council for a Better Louisiana President Barry Erwin. “If we’re going to do this, we need to see a benefit. It may not be a dollar benefit, but we need to see who it benefits and how.”

Despite gaps in information, policy experts say the new audit follows a trend in a more transparent direction because the prior audits were missing more information. Managers for 70 of the then 79 tax incentive programs did not submit enough information to comply with requirements in 2014, and 46 in 2016.

“We’re making some progress,” Moller said. “For years and years, these tax incentives got on the books and nobody bothered to figure out if the state was getting any return-on-investment. But in recent years, people are paying more attention to these.”

The newest reports contain more data on tax incentive programs than lawmakers have had access to ever before. The legislature is allowed to make changes to the tax code in the next regular session because it’s a fiscal session.

Erwin and Moller each say they believe some tax incentives work as intended and help to attract business or relieve the tax burden on some working Louisiana residents. They each added that as much as possible, lawmakers should see data or hear testimony to justify the incentive programs.

“Given the number of incentives we have, it’s hard to think that there aren’t some that need tweaking or maybe need to be hauled back a bit,” Erwin said.

Copyright 2018 WAFB. All rights reserved.