Report: ‘Tax revenue drop causes $197M La. budget deficit’

Louisiana’s Revenue Estimating Conference forecast a sharp reduction in state revenues for the rest of this fiscal year and into the next.

From the Associated Press:

Louisiana’s revenue forecast dropped $197 million Thursday, driven by plummeting state sales taxes as shoppers shut their wallets and businesses shrink spending in the tight economy.

The state income projecting panel, the Revenue Estimating Conference, revised tax collection estimates sharply downward for the current fiscal year that ends June 30, continuing a recent trend of forecast revisions to reflect drops in tax collections.

Thursday’s changes create a deficit in the $29 billion budget that must be closed in the coming weeks.

Economist Greg Albrecht said sales tax revenue has slumped, and the uptick in severance and royalty money from oil prices isn’t enough to combat it. Albrecht, the chief economist for the Legislative Fiscal Office, said he projects a more than 14 percent decrease in sales tax collections compared to last year — and he said that could get worse.

“There’s just a massive retrenchment of spending for households and businesses,” said Albrecht, whose revenue projections were selected by the conference as the official forecast. “People just aren’t spending.”

Estimates of business tax collections also were cut, along with revenue from gambling taxes.

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Report: 'Jindal OKs tax breaks on film, hunting'

From The Advocate:

Gov. Bobby Jindal announced Thursday he signed bills to grant tax relief on entertainment industry expenses and hunting supply purchases.

[...]

The tax breaks include an increased credit for the motion picture industry.

Jindal signed House Bill 898, which raises the film production tax credit to 30 percent, matching what Georgia offers.

The 30 percent tax credit is different from what the governor originally proposed.

[...]

The governor also signed:

House Bill 458 to clarify the rules regarding the sound recording investor tax credit.HB458 changes the tax break from a refundable tax credit to a direct payment with the state Department of Economic Development handling the paperwork for the investor.

Senate Bill 277 to make a tax credit on digital media production a flat 25 percent with an added 10 percent for payroll.

Senate Bill 52 to create a “Second Amendment Weekend” sales tax holiday on firearms purchases in early September.

The bill also applies to off-road vehicles, airboats and other supplies.

Jindal vetoed other legislation, House Bill 128, to create a similar sales tax holiday the weekend after Thanksgiving.

The governor said in his veto letter that the bills “attempt to accomplish the same purpose.”

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Governor Jindal Signs Tax Incentives Into Law

BATON ROUGE - Today, Governor Bobby Jindal announced that he signed nine tax incentive bills into law. Notably, he signed six tax incentives that will continue to make Louisiana more economically competitive, including HB 898 by Rep. Cameron Henry which increases the film production tax credit, HB 458 by Rep. Kirk Talbot which extends the sound recording production and infrastructure tax credit program, SB 277 by Sen. Ann Duplessis which extends and expands the Digital Interactive Media Tax Credit, HB 790 by Rep. Hunter Greene which extends the research and development tax credit, HB 110 by Rep. Jane Smith that provides a tax credit for clean burning motors, and HB 215 by Representatives Hutter, Leger, and Richmond that will create a cargo and infrastructure tax credit for Louisiana ports.

Governor Jindal said, “These tax incentives are critical tools to give Louisiana a bright economic future. By signing these bills, we’re ensuring that we not only have the ability to remain economically competitive, but that we can continue to move our state forward by making Louisiana the greatest place in the world to find a great paying job and raise a family.”

HB 898 by Rep. Cameron Henry is a Governor’s package bill that increases the film production tax credit from 25 percent to 30 percent and eliminates the phase-down of the tax credit program. Current phase out schedule for the film production credit (currently at 25 percent) is 20 percent on July 1, 2010, and then 15 percent on July 1, 2012.

HB 458 by Rep. Kirk Talbot is a Governor’s package bill that extends the sound recording production and infrastructure tax credit program by moving the program’s sunset provision to from 2010 to 2015 in order to stimulate long-term investment by the industry.

The Sound Recording Tax Credits provides credits for two purposes: production and infrastructure. For production there is a 25 percent refundable tax credit based on total in-state expenditures related to the production of a sound recording, and for infrastructure there is a 25 percent refundable tax credit based on total in-state expenditures for the development of sound recording studios.

SB 277 by Sen. Ann Duplessis is similar to Governor’s package bill HB 457, which extends and expands the Digital Interactive Media Tax Credit by permanently extending and increasing the credit by 5 percent creating a single rate of 25 percent of expenditures plus an additional 10 percent for Louisiana resident payroll expenditures (35 percent total credit for resident payroll). The bill also expands the definition of digital media to include technology companies.

HB 790 by Rep. Hunter Greene is similar to Governor’s package bill SB 108, which extends the research and development tax credit until December 31, 2013, and doubles the credit for small and emerging businesses with less than 50 employees. HB 790 also authorizes a taxpayer who receives a federal Small Business Innovation Research Grant to qualify for a tax credit equal to 40 percent of the award received during the taxable year. This is an increase in the current 20 percent credit.

HB 110 by Rep. Jane Smith provides a tax credit for the cost of qualified clean burning motor vehicle fuel property. Prior to the new law, a 20 percent tax credit was available for purchases of “clean burning motor property.” HB 110 will increase the tax credit to 50 percent of the investment and allow the credit to be refundable.

Moreover, prior to the bill for purchases of hybrid vehicles, the taxpayer could elect to take a credit of the lesser of two percent of the vehicle cost or $1,500. Now for purchases of hybrid vehicles, the taxpayer can elect to take a credit of the lesser of 10 percent of the vehicle cost or $3,000. The credit is also increased to 50 percent of the cost of delivery of alternative fuel including compression equipment, storage tanks and dispensing units.

HB 215 by Reps. Hutter, Leger, and Richmond will serve as a tool to help Louisiana ports enhance their competitiveness by creating a cargo and infrastructure tax credit for the state’s ports. The bill will specifically create the “Investor Tax Credit” which equals five percent per year of the total capital costs of a qualifying project and the “Import Export Credit” that relates to the individual income, corporate income, and corporate franchise tax liabilities of those who receive state certification.

Additionally, the Governor announced today he has signed the following tax incentive bills into law:

HB 189 – Rep. Greene

This bill provides for the sales tax exemption of meals furnished to the staff and students of educational institutions and other organizations.

HB 618 – Rep. Greene

This bill eliminates the $10 minimum corporate franchise tax.

SB 52 – Sen. Marionneaux

This bill authorizes an annual “sales tax holiday” for the purchase of firearms and supplies during the Second Amendment Weekend (first consecutive Friday-Sunday in September).

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Report: 'States consider oil and gas levies'; Louisiana goes against the grain

The Wall Street Journal reports that Louisiana is bucking a national trend of states attempting to relieve budget shortfalls by increasing taxes on oil production.
 

Lawmakers in Pennsylvania and California have proposed what are known as severance taxes on oil and natural gas produced in their states. A tax increase took effect in Arkansas at the beginning of the year, and Alaska last year raised its oil-production tax.

Some lawmakers in Louisiana want to take the opposite tack, in a bid to attract more drilling. The state House of Representatives recently approved a package of tax cuts targeted at certain high-cost forms of oil and gas production. Democratic Rep. Nickie Monica, the lead sponsor of one measure in the package, said he hopes to give Louisiana a competitive advantage at a time when other states are raising taxes. “We’re bucking a national trend,” he said.

Mr. Monica’s bill has encountered resistance in the state Senate, however, where lawmakers are concerned about reduced tax revenue.

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Editorial: 'Stretch funds for campuses'

An editorial in the Baton Rouge Advocate urges lawmakers to delay implementation of the expansion of an income tax deduction. The paper’s opinion staff says the state needs the revenue can relieve budget pressure on Louisiana’s institutions of higher learning.

The Baton Rouge Area Chamber is hardly alone in looking down the road and seeing potentially harder times for state colleges and universities. But the chamber deserves credit for tackling the politically sensitive issue head-on, calling for a delay in a scheduled tax cut for three years while the impact of revenue declines can be assessed.

We need more common-sense leadership in this crisis than we’ve been getting from elected officials, from Gov. Bobby Jindal on down. Endless bleating that delaying a tax cut amounts to a tax increase is not only transparently false but ignores the obvious: Legislators phased in the tax cut, and it should properly be reassessed in light of the decline in state revenue.

The chamber’s program for the future includes not only a tough-minded approach to recurring revenue but greater authority for colleges to raise tuition and fees without periodically crawling to the State Capitol for a two-thirds vote of the Legislature.

Read more.

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Report: 'Showdown on cigarette taxes, unemployment benefits today at Capitol'

The Times-Picayune’s Jan Moller previews the action expected Monday in the legislature.

As ever, the question is, “how to fund state government?”

By the time the House adjourns this evening, one of the following will almost certainly be true:
a) The (not so) great tax debate of 2009 will be pretty much done with after House Bill 889, which would raise cigarette taxes by 50 cents a pack, fails to get the 70 votes needed to send it to the Senate.

- Or -

b) The debate will be very much alive after the bill by Speaker Pro Tem Karen Carter Peterson, D-New Orleans, goes to the Senate with enough votes to override an expected veto from Gov. Bobby Jindal.

While most of the smart money is on option (a), the smart money hasn’t always been right this session, as everyone learned Thursday when the House unexpectedly ratified the Senate’s version of the $28.7 billion state budget and threw the state spending picture into the kind of disarray we haven’t seen for several years around the Capitol.

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Report: 'House backs 15-cent charge on Internet access'

The Louisiana House of Representatives voted overwhelmingly to impose a 15-cent monthly fee on Internet access.

Rep. Mack “Bodi” White, R-Denham Springs, said he sponsored the bill for Attorney General Buddy Caldwell, to raise money to finance a division in Caldwell’s office that investigates Internet crimes, particularly online sex crimes against children.

The measure would raise $2.4 million a year for Caldwell’s department, according to a financial analysis.

“I don’t think that 15 cents per month is too much to ask for our children’s protection,” said Rep. Simone Champagne, D-Jeanerette.

While White called it a usage fee, opponents called the charge a tax on Internet access. They also have questioned whether it would violate a federal law that prohibits states from taxing Internet services and would be challenged in court.

“Today it’s Internet access. Tomorrow, what’s it going to be? A subscription to DirecTV?” said Rep. Austin Badon, D-New Orleans.

“I don’t think we should start instituting a revenue stream for every criminal element that’s out there,” he added.

The bill heads next to the Senate for debate.

Governor Jindal’s office issued a statement opposing the measure, labeling it a tax increase.

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