The Louisiana Legislature has focused most of the state’s coronavirus relief strategy on businesses, rather than government programs and individual aid. Republicans leading the body are pushing over a dozen tax breaks and state incentive programs in the Legislature’s special session as a way to help restaurants, retail outlets and mom-and-pop shops survive the coronavirus slowdown.
They also voted to redirect $300 million in federal funding for local governments to a business relief fund – a move Democratic Gov. John Bel Edwards only reluctantly supported.
The tax proposals were largely drawn up by lobbyists and keep morphing as they move through the legislative process. It’s unclear how much their price tag will be if they are approved. They must be finalized by the time the special session ends June 30.
In their original form, the measures would have cost over $100 million in the next five years. They included plans to reduce the corporate franchise tax, give businesses a bigger payroll tax break and expand tax credits for rehabilitating historic buildings.
Louisiana’s independent fiscal analysts estimated that the state would have had significantly less money to spend on health care, universities, law enforcement and other government functions if they were passed. Lawmakers have whittled down the tax proposal in recent days, in part because of the projected financial impact.
Yet some Republicans argued that the official tax break cost estimates used by the state shouldn’t have caused so much concern. They said the evaluations don’t take into account the increase in tax revenue healthy businesses can produce. If more businesses fail because of the coronavirus slowdown, then fewer businesses — and business employees — will be paying taxes overall, they said.
“I think it’s our job to get small businesses back up on their feet,” said Rep. Stuart Bishop, R-Lafayette, who is the head of the House’s tax committee. “Small business is what pushes government (revenue).”
Still, Democrats said many of the tax breaks being pushed by Republicans don’t benefit the mom-and-pop shops that they are supposedly designed to help. At a recent hearing, Rep. Ted James, D-Baton Rouge, pointed out that smaller businesses rarely pay corporate franchise taxes, for example, and would be unlikely to benefit from the multiple proposals to cut that tax that Republicans were pushing.
James also said several of the tax changes Republicans put forward have been pushed by the business lobbyists for years. He said he believes the business community took advantage of the health crisis to get legislation passed that they wanted long before COVID-19 became a problem.
James said he wishes the Legislature had considered more for employees as opposed to employers. He had hoped lawmakers would look at increasing Louisiana’s unemployment benefits, which are some of the lowest in the country, or passing legislation that might help people infected with COVID-19 pay their medical bills. He also wanted to look at expanding sick leave and other protections for grocery store workers, delivery people and others who had to continue to work throughout the pandemic.
“If we were doing something for frontline workers, that would make me feel a little bit better,” he said.