Following are the priorities and outcomes for which the Baton Rouge Area Chamber (BRAC) advocated during the 2017 Regular Session of the Louisiana Legislature. BRAC’s agenda can be organized in three broad categories: transportation infrastructure, the economy, and education and workforce.
With another Special Session commencing just 30 minutes after the conclusion of the Regular Legislative Session, the exercise of unfinished business has become the new normal at the Capitol. In just a 17-month span, our Legislature has now held six legislative sessions.
Now that two Special Sessions and the Regular Legislative session have concluded, it’s important to analyze the results of the session for regional economic development: What our legislators accomplished, what they failed to act on, and what it all means for the Capital Region.
For BRAC, the greatest disappointment of the Regular Session was the Legislature’s failure to act on the transportation crisis plaguing the Capital Region. By kicking the can down the road on this extremely important issue that impacts both economic development and quality of life, the Legislature allowed for a massive missed opportunity to secure additional funding necessary to address the state’s crumbling transportation infrastructure. With this window of opportunity closed, it is unlikely that the Capital Region can expect any meaningful new funding for traffic solutions until 2021 at the earliest.
Apart from the failure of the gas tax increase, BRAC accomplished important wins during the session, the most significant of these being the reinstatement of the Research and Development Tax Credit. BRAC was also able to help protect businesses from unbalanced and anti-growth taxes for small businesses. And, our defenses of the economic development toolkit and K-12 education reforms were successful.
Review of BRAC Session Priorities
Focused on maintaining the economic development momentum the Capital Region has experienced over the last several years, BRAC released its agenda of high priorities for the session, with a primary focus on solving the transportation crisis that is negatively impacting economic development and the quality of life of our region. Those priorities included:
- Secure funding to solve the Capital Region’s transportation crisis,
- Defend Louisiana’s economic development toolkit,
- Support a pro-growth and balanced approach to tax reform,
- Improve strategies for innovation and economic diversification by reinstating the Research & Development Tax Credit,
- Protect K-12 educational reforms and student achievement gains, and
- Oppose legislation that imposes costly mandates on business.
Secure funding to solve the Capital Region’s transportation crisis
HB 632, by Rep. Steve Carter, was the BRAC and BUILD IT Coalition transportation investment bill that would have increased the state’s motor fuel tax by 17-cents, generating over $500 million a year, all of which would have been dedicated solely to the planning and construction of transportation projects throughout the state.
It has been almost 30 years since Louisiana last increased the state gas tax. The 16-cent gas tax increase back in 1989 has a purchasing power of only seven cents in today’s market. While costs for concrete, asphalt, steel, laborers, and professional services like engineering and environmental studies have steadily risen over the last three decades, Louisiana’s investment for these services has remained the same, creating a huge funding gap between infrastructure needs and available revenue. The proposed 17-cent gas tax increase would have restored the value of the fuel tax had it been indexed years ago. Moreover, the infrastructure investment called for in HB 632 would have helped create at least 65,000 well-paying jobs in Louisiana in the first ten years, and generated $26 billion in economic activity.
BRAC and business groups did not back a gas tax lightly, the decision was difficult. However, we found no other way to fund substantial projects throughout the state, specifically those needed to solve the “Baton Rouge Bottleneck,” an issue BRAC investors continue to site as the greatest obstacle to business growth in the region.
BRAC established principles to reflect its support for an increased gas tax, which were:
- Continue to restore trust to the Transportation Trust Fund (TTF), and prohibit the transfer of TTF funds to non-transportation uses
- Leverage existing financing opportunities
- Significantly increase transportation revenue sufficient to address the state’s $13 billion maintenance backlog and construct new capacity “megaprojects”
- While a variety of sources were considered, the bulk of funding must come through an increase in the state gas tax
- Direct all new revenue to construction and maintenance projects
- Increase transparency and accountability on megaproject construction, including project delivery timeline, prioritized through a data-based analysis of project benefits
When HB 632 was heard in the House Ways and Means Committee, the business community flooded the Capitol in support of the legislation. It was an impressive showing to say the least. In what many considered an impossible task, the bill passed out of committee by a vote of 9 to 7. Unfortunately, BRAC and its partners were unable to attain the 70-vote super majority needed to pass the bill out of the House. The vote count reached as high as 60 members, showing bi-partisan, statewide support. A strong showing of Republicans in urban centers that stood to benefit from the increased investment in infrastructure, including a few holdouts in the Capital Region, would have been necessary to pass transportation funding this year. Once it was clear this bill did not have the votes required to clear the House, Rep. Carter withdrew the bill without requiring a vote.
The failure by the Legislature to fund transportation needs should rest on the backs of legislators who did not offer their support for this funding proposal, or any other for that matter. Those Capital Region legislators who failed to support transportation funding are out of step with the public who are demanding their leadership provide immediate solutions to the traffic and infrastructure challenges of the region. By saying “no” to the gas tax, what are these legislators saying “yes” to? Crumbling roads, deficient bridges, and traffic gridlock?
Though BRAC was unable to pass legislation securing additional revenue for transportation, it should be noted that we came closer to accomplishing this than we have in years. To support the economic development case for infrastructure funding, BRAC, One Acadiana and the regional economic development groups helped establish and lead a state-wide coalition of 35 chambers of commerce and business associations that supported an increased gas tax as a critical path for the state’s economy. Because this is such an important issue for the Baton Rouge Area, BRAC will continue to work with our local leaders, legislators and Congressional members to identify future funding opportunities.
As part of the legislative strategy formed to garner support for the gas tax, BRAC played an instrumental role in the passage of other transportation-related legislation that will provide for more accountability and transparency in DOTD’s highway priority program, along with legislation that will protect revenue generated by a future gas tax increase.
HB 354, by Rep. Major Thibaut – a constitutional amendment that would protect revenue generated by a new gas tax by prohibiting those funds from being used on government employee wages and related benefits – will go to the voters for approval this October. The passage of this constitutional amendment is important because when the next opportunity to secure transportation funding at a state level arises, we must be able to show legislators and their constituents that new revenue will be used only for the planning and construction of transportation projects, rather than disappearing into state government.
BRAC also supported SB 57, by Sen. Page Cortez, a constitutional amendment that would have removed the Legislature’s authority to fund the Louisiana State Police out of the Transportation Trust Fund (TTF). This bill was passed by the Senate and the House Appropriations Committee, but failed to pass off the House floor. This was an additional failure by the House to reestablish the full trust of the public in the Transportation Trust Fund. The gas tax was tied to the passage of the safeguard on state spending.
The final piece of the BRAC-supported transportation legislation package was HB 598 by Rep. Neil Abramson, which sought to increase transparency and accountability in the highway priority program through multi-year project delivery reports and an annual audit of the program by the Legislative Auditor. The bill was passed by the Legislature; however, there was a last-minute amendment to the bill tacked on by the Senate that would have allowed the Joint Committee on Transportation to add or substitute any transportation project into DOTD’s annual construction program project list where current law did not allow politics to override planning. This amendment raised serious concerns leading to the Governor vetoing the legislation. The Governor has not proposed a similar executive order to the original bill, but could, as recommended by PAR, issue an executive order we would support as a sign of the Administration’s commitment to greater transparency.
Defend and improve Louisiana’s economic development toolkit:
Over the nine-week Regular Legislative Session, BRAC actively opposed several bills that sought to further weaken important economic development tools like the Industrial Tax Exemption Program (ITEP), Quality Jobs Program, Digital Media and the Angel Investor Tax Program.
BRAC opposed SB 26, by Sen. J.P. Morrell, which sought to prohibit ITEP contracts from exempting millages related to funding for public school systems. It was killed on the Senate floor. BRAC staff worked closely with LED to amend SB 183, also by Sen. Morrell, to reduce the negative impact the bill would have had on the Quality Jobs Program. In its original posture, the bill would have raised the minimum average hourly wage for the program from $14.00 to $21.66 across the board, from the current two-tier wage model. The compromise amendment added a second rate tier at a reduced rate of 4 percent for a minimum hourly wage of $18.00, and enabled companies currently in negotiation to not be affected by the changes.
BRAC worked against SB 98, by Sen. Jack Donahue, which in its original posture would have required that LED “incentive expenditures” be appropriated in the state’s operating budget. By requiring such an appropriation, the legislature would effectively be placing a cap on these economic development incentive programs. The bill was amended in the House Appropriations Committee to remove the appropriation requirement, and instead require that the anticipated expenditures be listed as “recommended expenditures” in LED’s budget. Once the appropriation provision was removed, BRAC no longer opposed the bill.
BRAC also supported HB 237, by Speaker Taylor Barras, which extended the sunset for the Enterprise Zone Program for another four years. Both bills were passed by the Legislature.
Unfortunately, two bills that would have created an additional economic development tool failed to pass out of Senate Revenue and Fiscal Affairs after clearing the House. HB 444 and HB 445, both by Rep. Alan Seabaugh, would have allowed companies and local governing authorities to negotiate and enter into cooperative endeavor agreements for payment in lieu of taxes (PILOTs) without the company having to transfer ownership of its tax-exempt assets to a non-taxable entity. Unlike traditional PILOTs, HB 444 and HB 445 would have granted each local taxing jurisdiction full autonomy to negotiate a satisfactory level of abatement in exchange for the economic benefits of attracting commercial activity, or the taxing jurisdiction could decide to not negotiate at all.
Support a pro-growth and balanced approach to tax reform:
A favorable tax climate for business is not only related to economic development incentives, but also to the overall tax structure of the state. Unfortunately, the 2017 Regular Session presented zero pro-growth and balanced tax reform instruments that BRAC could support. BRAC did, however, actively oppose several pieces of unfair and anti-business tax measures that sought to generate additional revenue for the state by increasing taxes on business.
HB 628, by Rep. Sam Jones, was the Governor’s Corporation Activities Tax (CAT Tax) that would have replaced a substantial portion of state revenue to be lost when the fifth penny expires next summer. This gross receipts form of taxation drew harsh criticism from tax experts and the business community when the bill was heard in the House Ways and Means Committee, as it sought to tax corporations based upon their business activities rather than the company’s actual profits. Such a taxing mechanism was cited by experts as being regressive due to its “tax pyramiding” or the taxing of one good or service multiple times, with resulting costs often being passed onto the consumer. After two days of deliberations on the bill and seeing that the bill did not have the support of the committee, Rep. Jones requested the bill be voluntarily deferred.
BRAC opposed Rep. Kenny Havard’s HB 648, which was known as the Louisiana Corporation Flat Tax. Like the CAT Tax, this bill would have taxed the business activities of a corporation regardless of whether or not the business was profitable. The bill was involuntarily deferred by the House Ways and Means Committee by a vote of 11 to 2.
BRAC was successful in its opposition of two bills that sought to make the temporary removal of certain exclusions and exemptions from the 2 percent sales and use tax permanent. HB 609, by Rep. Jay Morris, was favorably reported by the House Ways and Means committee but failed to pass off the House floor by a vote of 22 to 79.
HB 411, by Rep. Ted James, which was an identical bill to HB 609, was also passed out of Ways and Means but was never heard on the House floor.
HB 655, by Rep. Gene Reynolds, was an attempt to levy the state’s sales tax on certain sales of services that are not currently subjected to this tax. Some of the services added would have included: credit reporting services, debt collection services, data processing and data storage, and immoveable property repair services. The bill was heard in House Ways and Means, but was voluntarily deferred and never brought back before the Committee for a vote.
Improve strategies for innovation and economic diversification:
In an innovation-driven community like the Capital Region, BRAC has made it a priority to reinstate the effectiveness of the Research and Development (R&D) Tax Credit, especially for the small business community. In 2015, the Legislature gutted the benefit of the program for small businesses doing research in Louisiana. In a huge win this session, BRAC successfully advocated for the passage of HB 300 by Rep. Paula Davis, which authorizes the transferability of the R&D tax credit for businesses in Louisiana that receive a federal Small Business and Innovation Research (SBIR) grant or Small Business Technology Transfer (STTR) grant.
BRAC supported HB 454, by Rep. Neil Abramson, which extended the sunset for the Angel Investor Tax Credit Program from July 1, 2017 to July 1, 2021. In addition to reauthorizing the tax credit, the bill also changed the credit to compress the holding and payout periods, aligning Louisiana more closely with other states and making the credit more attractive for investors. The Angel Investor Tax Credit is an important economic development tool that helps drive innovation in our region and throughout the state by providing capital for entrepreneurs’ emerging technologies that are frequently viewed as too risky for banks and private equity firms. By filling this financing gap, angel investors are providing entrepreneurs the opportunity to cultivate their technologies and grow their business, which otherwise would not be possible. In 2011, BRAC led efforts behind the renewal of Angel. Since then, the tax credit has driven investment in over 55 Louisiana startups and generated $37 million in direct private investment.
Protect K-12 educational reforms and student achievement gains:
With every legislative session, there are always bills that attempt to weaken or dismantle K-12 education reforms that BRAC has advocated for over the last several years. This session was certainly no different.
Opposing bills that would weaken or dismantle school choice.
BRAC successfully opposed HB 239 by Rep. Joe Bouie, which would have required BESE to submit unspecified charter school performance data, analyses of such data, and other charter school information as determined by the legislative auditor, and would have further prohibited BESE and local school boards from authorizing charter schools until the legislative auditor’s requests were satisfied. The bill failed to pass out of House Education by a vote of 3 to 9.
HB 434, by Rep. Pat Smith, would have reduced the rebate amount for taxpayer donations to a School Tuition Organization (which awards vouchers to students from donations received) from a dollar-for-dollar rebate to a 70 percent rebate. This bill failed to make it out of committee; however, a similar Senate bill was passed by the Legislature but was amended throughout the process to limit its negative impacts. SB 95, by Sen. Blade Morrish, will replace the Tuition Donation Rebate with a nonrefundable tax credit that is still a dollar-for-dollar rebate. To qualify for the credit, the taxpayer must be required to file a Louisiana income tax return, which is not a requirement under present law. BRAC opposed the bill as it will likely reduce the number of donations made for the school voucher program.
BRAC was successful in its opposition of SB 13, by Sen. Blade Morrish, which would have restricted kindergarten enrollment into higher-performing schools only to children zoned to attend C, D or F public schools. Because kindergarten students currently only need to meet family income requirements to enroll into the school of their parent’s choice, this restriction would have substantially cut enrollment in the student voucher program. The bill failed in Senate Education by a vote of 0 to 5.
Supporting bills that would strengthen policies concerning school choice.
BRAC supported several successful bills that will further increase the development of high-performing alternatives to traditional public school models and increase school choice for students and their parents.
HB 242 by Rep. Julie Emerson will require the Board of Elementary and Secondary Education (BESE) and local public school boards to post independent third party evaluations of charter school proposals on their websites at least five business days prior to voting on the charter proposal. HB 517, by Rep. Gary Carter, will require the Department of Education to publish an annual educational equity report that highlights where students do, or do not, have access to quality education. Such reporting will identify specific areas across the state that lack quality educational options for students, establishing the need for additional school options.
Another BRAC-supported bill that would have increased school choice if passed by the Legislature was HB 567 by Rep. Nancy Landry. This bill would have cleaned up current public school choice law by requiring local school districts to develop clear policies that signal where higher-performing schools have capacity to accept more students. The bill was voluntarily deferred in committee.
Opposing bills that would turn back major strides in educator accountability and higher standards
BRAC opposed all legislation that attempted to weaken or dismantle accountability and higher standards during the regular session. HB 532 by Rep. Frank Hoffman was an attempt to remove the current legal requirement that teacher and principal job evaluations be based, in part, on student achievement data, by making the consideration of student achievement data optional. SB 73, by Sen. Milkovich, would have allowed each local school system to set its own academic standards and choose its own tests for purposes of accountability, basically dismantling Common Core. Neither piece of legislation made it out of its respective education committee.
BRAC opposed HB 536 by Rep. Vincent Pierre, which would have prevented the Department of Education from assigning a score of zero in the calculation of School Performance Scores anytime a student chooses not to take a standardized test. Such a policy could be taken advantage of by schools who may encourage their low-performing students not to take these tests, subsequently avoiding performance accountability. The bill was voluntarily deferred in committee.
BRAC opposed SB 170 by Sen. Regina Barrow in its original posture as it would have prohibited the Department of Education from assigning school letter grades to schools or school districts that were included in a disaster declaration by the governor. BESE already has a policy to address this for truly extenuating circumstances on a school-by-school basis. The bill was amended to simply incorporate BESE’s existing policy into statute. With this amendment, BRAC removed its opposition to the bill. A similar bill, HB 545 by Rep. Ted James, was filed but never presented in committee.
Supporting legislation that will increase student post-secondary education and workforce readiness
BRAC strongly supported successful legislation in SB 225 by Sen. Sharon Hewitt, which creates the Louisiana Science, Technology, Engineering, and Mathematics (LaSTEM) Advisory Council. The LaSTEM Advisory Council will coordinate and oversee the creation, delivery and promotion of STEM education programs throughout the state. This council will assist in achieving greater collaboration from STEM stakeholders.
The Legislature failed to pass SB 82 by Senator Conrad Appel, which would have required local districts to reimburse costs for noncredit remedial college course(s) taken by students who completed their college-prep core curriculum in high school. The bill was favorably reported by the Senate Education Committee, but was dual referred to Senate Finance where it failed to pass. BRAC supported the bill, as it would have established a mechanism to hold high schools accountable for not properly preparing students for postsecondary education.
BRAC also supported SB 209 by Sen. Mike Walsworth, which failed to pass off the Senate floor. The bill would have required postsecondary education management boards, BESE, the Board of Regents, and local education agencies to collaborate and coordinate efforts to provide dual enrollment courses. Sen. Walsworth chose not to run the bill after facing strong opposition from the School Board Association who argued the bill would create an unfunded mandate.
Oppose legislation that imposes costly mandates on business:
In yet another legislative session, BRAC worked to oppose employer mandates that would obstruct the ability of business owners to effectively manage their own companies. While BRAC supports existing laws protecting equitable pay, a variety of bills introduced this session would have potentially opened the door to frivolous litigation and damaged Louisiana’s economic competitiveness. The most notable was HB 222, by Rep. Helena Moreno, which would have prohibited employer retaliation against an employee who discusses wage information. The bill was involuntarily deferred in House Labor by a vote of 5 to 9.
BRAC opposed SB 2 by Sen. J.P. Morrell, which required that all employees be compensated equally for the same or equal kind and quality of work whether employed by the state, local government or private sector employers. Currently, the Louisiana Equal Pay Act only requires that women working as employees of the state of Louisiana shall be entitled to the same compensation as men employed by the state of Louisiana. The bill made it out of committee but failed to pass off the Senate floor.
There was only one minimum wage bill this session, but it did not pass out of committee. SB 153, by Sen. Troy Carter, would have raised the minimum wage to $8.00 beginning January 1, 2018, and increased it to $8.50 on January 1, 2019. The BRAC-opposed bill was defeated in Senate Finance by a vote of 3 to 7.
Support criminal justice reinvestment legislation:
BRAC, along with several other business organizations, supported several justice reinvestment bills that will help ex-offenders successfully reenter into the workforce by clearing certain barriers that currently hinder successful transitions from prison back into the community.
HB 249, by Rep. Tanner Magee, tailors criminal justice financial obligations to a person’s ability to pay, and modifies penalties for failure to pay such obligations. HB 489, by Rep. Walt Leger, provides for the reinvestment of a substantial portion of the savings related to sentencing reforms into research-based programs that reduce recidivism and support victims. HB 519, by Rep. Julie Emerson, will expand opportunities for ex-offenders reentering the community to earn full occupational licenses. BRAC joined with other chambers of commerce and business organizations in a show of support for criminal justice reform, highlighting the expense to government and ineffectiveness of specific policies.
These bills were passed by the Legislature and have already been signed into law by the Governor.