Louisiana might pay out overlapping business incentives for a decade or more

Yahoo

11-05-2025

U.S. Energy Secretary Chris Wright, second from left, Gov. Jeff Landry, center, and U.S. Interior Secretary Doug Burgum walk with executives of Venture Global LNG during a March 6, 2025, tour of the company's export facility in Plaquemines Parish. Venture Global receives payroll rebate incentives through the state's Quality Jobs Program. (Governor's Office photo)
Economic development officials in Louisiana want to place less emphasis on the number of new jobs major projects bring to the state and more on what they pay employees.
Their strategy calls for a new business incentive program to replace a popular existing one, but it could be a decade or longer before the state stops doling out both perks – potentially costing the public hundreds of millions of dollars annually.
Last month, the House Committee on Commerce approved House Bill 507, by Rep. Julie Emerson, R-Carencro, which would create the Louisiana High Impact Job Program. It hopes to entice companies that offer jobs with above-average pay in the parish where they intend to invest. In return, the state will award the business a grant that will cover a portion of that salary – the more the company pays new hires, the higher the grant.
Companies providing jobs that pay 125% of the parish average will receive a grant to cover 18% of each salary. The award goes up to 22% for salaries at 150% of the local level.
For what the bill deems 'distressed areas,' employers would have to clear lower hurdles. Their businesses would receive an 8% grant for salaries at 110% the average.
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There are no limits in the bill on the number of new jobs a company can add to claim the benefit, though the bill gives state officials the right to update the program's rules. There is a ceiling of $200,000 per year per job and $125 million in annual grant awards for the entire program.
Employers must offer health insurance coverage to qualify for a High Impact Jobs grant, and the new hires have to be full-time direct employees or work for a subsidiary named in the grant contract with the state.
The bill allows remote jobs to qualify for the incentive, though they must be Louisiana 'residents' as defined under state tax law.
Money for the grants will come from state corporate income and franchise taxes, according to the bill, though lawmakers eliminated the franchise tax last year, effective Jan. 1, 2026.
Legislative calculations attached to Emerson's proposal peg the High Impact Job Program's average cost to the state at $69.4 million annually over the next five years.
Louisiana Economic Development Secretary Susan Bourgeois, who joined Emerson to present her bill to the committee, acknowledged the High Impact Job Program would overlap the incentive it's intended to replace – the Quality Jobs program – for years to come. The Quality Jobs incentive gives companies a 6% rebate on their payroll expenses for 10 years. It also comes with either a state sales tax break on money the business spends on its job-creating project or a 1.5% rebate for facility expenses.
These project investment elements are not part of the High Impact incentive, which would be offered for a three-year period with an opportunity to renew for two more years. That would make it half the length of the 10-year Quality Jobs incentive.
'Quality Jobs was really more about the number of jobs, where this [High Impact] program is far more about the wages for the jobs,' Bourgeois said in an interview after the bill was approved.
The secretary told lawmakers the High Impact Job Program will also be open to small local businesses, as long as they create jobs with salaries above the parish average.
Emerson's bill, which gives the program a 10-year lifespan, goes next to the House Appropriations Committee for its financial impact on the state to be considered.
As part of their tax and budget special session last fall, legislators agreed to let multiple business incentives lapse once their statutory life expires. That deadline is the end of next month for most of the programs eliminated. This was paired with a package of business tax reductions, including a lower, flat corporate income tax rate and the end of a state franchise tax that its detractors called an unwarranted fee to do business in Louisiana.
All told, lawmakers agreed to end eight business incentive programs last year, effective June 30, which will remove $180 million to $225 million in state obligations from the state budget, according to Bourgeois.
Jan Moller with Invest in Louisiana, a progressive fiscal policy watchdog group, told the Illuminator he expected the business-friendly legislature would eventually restore some of the incentives it targeted last year.
'I'm not surprised that it happened,' Moller said. 'I'm surprised that it's happening four months after the ink dried on that tax bill.'
Although Quality Jobs was among the incentive programs lawmakers eliminated, the state will continue to accept applications until its June 30 sunset date. Its actual payroll rebates aren't issued until a qualifying company adds new jobs, and those hires can be made years after the incentive is approved. Only then does the 10-year clock on the incentive period start.
For projects such as the Meta data center in northeast Louisiana, which isn't expected to start hiring for another five years, the state could still be making good on its Quality Jobs promises in 2040, Bourgeois confirmed.
Quality Jobs recipients will be given the option to switch over to the High Impact program, but they won't be able to double up on incentives, the secretary said.
'If they have an existing [Quality Jobs] contract, then they can live out that contract,' Bourgeois said. 'They can also choose to look at it and see if they would rather do it differently.'
Paperwork the Illuminator obtained through a public records request with Louisiana Economic Development shows 16 projects have applied for Quality Jobs rebates in 2025 as of the end of April. All told, they would create more than 1,500 direct jobs with a combined payroll of nearly $167 million once all new hires are made.
Ileana Ledet, LED's chief economic competitiveness officer, told lawmakers the High Impact Job Program is modeled after similar incentive programs in Georgia, North Carolina and Texas that are considered successful.
'We're looking at best practices and making our recommendations based on what other states are doing well in incentivizing those higher-wage jobs,' Ledet said.
Moller questions whether the High Impact Jobs Program will live up to its name. By linking the incentive to what's already a below-average parish salary, companies won't be required to move the needle significantly on living wages in his opinion, he said.
'We are underwriting payroll of companies that we like, and they don't even have to be particularly great jobs,' Moller said. 'They just have to pay a little bit above average.'
The most recent figures from the U.S. Bureau of Labor Statistics show average weekly wages in Louisiana during the first quarter of 2024 were $1,195, ranking 39th in the nation. The rate was lower than the state average in 47 out of 64 parishes, with Catahoula at the bottom with an average weekly wage of $710.
The legislation gives Louisiana Economic Development the authority to carve out areas within a parish and declare them 'distressed.' This is what's planned for the Hyundai steel mill in Donaldsonville, Bourgeois said, where salaries significantly trail the Ascension Parish average. The typical weekly pay in Donaldsonville is $836, while the parish rate is $1,449, according to federal data.
Emma Wagner, LED's communications director, said rules are still being hammered out to define what makes an area distressed. She expects they will include criteria such as the unemployment rate and whether the area qualifies for federal tax breaks targeting low-income communities.
Moller acknowledged his outlook for the High Impact Jobs Program is shaded by the efficacy of the Quality Jobs incentive, which the Legislative Auditor determined in a 2020 report was a net loss for the state. That review also determined only a third of Quality Jobs investment spending went to Louisiana companies, and that the majority of household income those jobs created would have likely happened without the rebate program.
'These kinds of subsidies end up becoming just lagniappe, but not the thing that brings a company into Louisiana,' Moller said.
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