Governor Bobby Jindal announced today four economic development reforms he will pursue in the upcoming legislative session to make Louisiana more competitive than other states to secure economic development projects. The Louisiana Department of Economic Development estimates that these four proposals will generate at least 10,000 new direct and indirect jobs in the next five to ten years.
Governor Jindal said, "If our goal is to truly become the best place in the world to raise a family and start a career, then we must continue to make Louisiana more competitive with the rest of the country and the world. That's why we're proposing four new reforms to improve Louisiana's business climate so that we not only compete with other states for economic development projects, but so we win and bring more new job opportunities here for our people.
"We must pass these reforms in order to give us more flexibility so that we can target new industries and diversify our economy. But passing these reforms alone though will not bring us long-term prosperity. Indeed, our economic development efforts are uniquely linked to the strength of our education system. That's why we must not only push to create more tools to bring companies here, but it's critical that we pass our education reform plan that gives more choices to families, rewards teachers and gives more flexibility to school leaders. By accomplishing both, our state will have more tools to bring companies here and our students will be better prepared for jobs in the 21st century."
"Louisiana has made tremendous strides in its competitiveness, and we are seeing the results on the ground -- with more jobs and a more robust business development pipeline than ever," said Michael Hecht, president and CEO of Greater New Orleans Inc. "These new incentives represent important additional improvements in our business environment that will ensure that our positive economic momentum continues."
"The North Louisiana Economic Partnership commends Gov. Jindal, Secretary Stephen Moret and the LED team for pressing ahead to find additional ways to enhance our long-term economic competitiveness," said NLEP President Kurt Foreman, who added that the incentives will help support projects for Barksdale Air Force Base, the Cyber Innovation Center, logistics and distribution on Interstate 20 and the future of the GM facility in Shreveport. "We look forward to learning more and helping these new ideas come together in support of Louisiana's economic prosperity."
"This package of legislation provides very targeted and efficient new tools to help us remain competitive," said Jim Clinton, president and CEO of the Central Louisiana Economic Development Alliance. "We look forward to their successful deployment in Central Louisiana."
"The strong gains Louisiana has made as a pro-business state have placed us in a position to compete on the world stage," said George Swift, president and CEO of the SWLA Economic Development Alliance. "With these targeted incentives Louisiana will be even more competitive and we will gain more jobs and a better quality of life for our citizens."
"In the competitive field of economic development, it is never enough to rely on existing incentive programs that have already allowed us to reach top rankings," said Vic Lafont, president and CEO of the South Louisiana Economic Council. "It is the obvious intent of our Governor to come up with aggressive additions to the playbook that will not only get us again at the top rankings, but a Louisiana incentive package that will help keep us there."
"The governor's proposals are strategically targeted at key areas that help us compete for new business investment and include some smart provisions to ensure return on investment," said Adam Knapp, president and CEO of the Baton Rouge Area Chamber. "We are excited to see the Governor pushing forward aggressively on jobs, education, and other fronts."
Economic Development Reforms
First, the Governor is proposing to use a calculation that's increasingly common across the country, and offer targeted companies the opportunity to base their corporate income and franchise taxes on the amount of in-state sales they generate, rather than basing their taxes on a combination of sales, property and payroll factors.
Currently, the state is only using this approach for manufacturing and merchandisers in Louisiana. The new reform will extend this opportunity to other competitive projects that have the ability to generate tremendous growth for the state. These other target industry projects include corporate headquarters, data centers, logistics and warehousing, clean technology, destination healthcare, R&D operations, renewable energy, and digital media and software development. This option would only be offered for projects that yield a positive return on investment for the state. This bill will be authored by Rep. Joel Robideaux in the House and Senator Mike Walsworth will also carry the legislation in the Senate.
Second, Governor Jindal is calling for the state to offer a ten-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 healthcare, R&D operations, renewable energy, and digital media and software development.
The Industrial Tax Exemption is now available only to manufacturers who are expanding or who are building new 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 would require the passage of a constitutional amendment by 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. This proposal will authored by Rep. Joel Robideaux in the House and Senator Neil Riser will carry the legislation in the Senate.
Third, Louisiana currently offers a payroll rebate of up to six percent for as many as ten years to companies who create high-quality jobs. The Governor's proposal will create a new incentive -- valued at up to 15 percent -- which would be offered only in highly competitive site selection processes.
Industries that would be targeted with this new incentive include corporate headquarters, clean technology, next-generation automotive, aerospace, destination healthcare, R&D operations, pharmaceuticals manufacturing, and renewable energy. This option would only be offered for projects that yield a positive return on investment for the state. This proposal will authored by Rep. Joel Robideaux in the House and Senator Neil Riser will carry the legislation in the Senate.
The fourth and final proposal focuses on bringing more corporate headquarters to Louisiana. Under the proposal, for significant corporate headquarters projects, the state will offer a 25 percent rebate over five years on qualifying relocation costs to companies that move their facilities to Louisiana.
In today's economic environment, states offer highly competitive incentive packages for the opportunity to be home to thousands of direct headquarters jobs and indirect jobs generated by Fortune 1000 companies. 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. This option would only be offered for projects that yield a positive return on investment for the state. This proposal will authored by Rep. Joel Robideaux in the House and Senator Neil Riser will carry the legislation in the Senate.
Business Climate Rankings
Governor Jindal emphasized that Louisiana has climbed to its highest-ever business climate ranking by every leading publication that measures the economic climate of states:
* Louisiana jumped 14 positions in the latest Forbes ranking of Best States For Business, for a total improvement of 19 spots since Governor Jindal took office.
* Site Selection magazine elevated its ranking of Louisiana's business climate to No. 7 in the U.S., an astonishing climb from No. 25 just two years ago.
* Area Development magazine said Louisiana ranks No. 6 among the 2011 Top States for Doing Business. They also ranked Louisiana No. 3 in leading the economic recovery, No. 3 for business friendliness, No. 3 for the overall cost of doing business, No. 4 for workforce development programs and No. 5 for labor costs.
* Business Facilities magazine ranked the state's business climate at No. 7 in the U.S. and named Louisiana its 2010 State of the Year.
* Southern Business & Development magazine named Louisiana its State of the Year for the third straight year.