Mar 09, 2009
Governor Bobby Jindal Announces Proposals to Eliminate 22 Boards and Commissions and Extend Six Existing Tax Credits

BATON ROUGE – Today, Governor Bobby Jindal held a press conference to announce a proposal for eliminating 22 state boards and commissions that are no longer active or essential. In addition, Governor Jindal called for the extension of six existing tax credits that are set to expire or sunset at reduced levels.

Upon announcing the proposal to eliminate many non-active or non-essential boards and commissions, Governor Jindal said, “Many of the boards and commissions on our books in state government are out-dated. Some are no longer active, or their function is served through another existing state agency. We must streamline the functions of government wherever possible.”

Governor Jindal said there were three different triggers for eliminating these boards and commissions. These 22 groups are either currently inactive, can be absorbed by other existing boards or agencies, or have fulfilled their original purpose. In the upcoming legislative session, Representative Mert Smiley will introduce legislation to remove these 22 boards and commissions from the state rolls.

In addition to removing these boards and commissions, the Governor said that his administration, in collaboration with the State Senate, has already abolished 68 boards and commissions that were inactive, yet still on the state books.

Representative Mert Smiley said, “I appreciate the governor’s support on this measure to reduce the size of state government. I’ve been working on this for a number of years and we’ve already abolished a significant amount of boards from the state rolls.”

22 Boards And Commission Being Proposed For Elimination:

The Governor’s Aviation Advisory Commission
Reason to Eliminate: The commission is inactive.

The Commission on Best Practices in School Discipline
Reason to Eliminate: The commission’s function has been absorbed by the Department of Education.

Bossier Parish Pari-Mutuel Live Racing Facility Economic Redevelopment and Gaming Control
Reason to Eliminate: The board is inactive and its function overlaps with the Louisiana State Racing Commission and the Louisiana State Gaming Board.

Calcasieu Parish Pari-Mutuel Live Racing Facility Econ Redevelopment & Gaming Control Asst District
Reason to Eliminate: The board is inactive and its function overlaps with the Louisiana State Racing Commission and the Louisiana State Gaming Board.

Advisory Committee on Licensing of Child Care Facilities and Child Placing Agencies
Reason to Eliminate: The committee was originally established to develop minimum standards for licensure of Class A facilities and advising the Department of Social Services on decisions to revoke, not renew, or not issue licenses and issues relating to child day care centers, child placing agencies, child residential facilities and maternity homes. Minimum standards for licensure of Class A facilities have been established and the Department of Social Services handles all licensing matters.

The Louisiana Economic Development Council
Reason to Eliminate: The function of the council overlaps with the Louisiana Economic Development Corporation, the Board of Commerce and Industry and the Louisiana Department of Economic Development.

The Electrolysis Examiners Board
Reason to Eliminate: The function of the board can be absorbed into the Louisiana State Board of Cosmetology.

The Employment of the Handicapped Commission
Reason to Eliminate: This commission has been inactive and its potential functions overlap with the Louisiana Workforce Commission and the Louisiana Developmental Disabilities Council.

The Events Center District Board
Reason to Eliminate: The board is inactive.

Home Instruction Program for Preschool Youngsters (HIPPY) Advisory Board
Reason to Eliminate: The board is inactive and its function can be absorbed by the Department of Education.

The Louisiana Housing and Community Development Advisory Task Force
Reason to Eliminate: The task force is inactive and its functions overlap with the Louisiana Housing Finance Agency.

The Mississippi River Road Commission
Reason to Eliminate: The commission is inactive and its function overlaps with the Mississippi River Parkway Commission of Louisiana.

The Multidisciplinary Advisory Council
Reason to Eliminate: The council is inactive.

Nursing Supply and Demand Council
Reason to Eliminate: The council is inactive and its function can be absorbed by the State Board of Nursing.

Offshore Terminal Authority Board of Commissioners
Reason to Eliminate: The board is inactive, and its functions are currently being administered by an Executive Director under the State Department of Transportation.

Rural Health Care Authority
Reason to Eliminate: The authority is inactive and its function overlaps with the Department of Health and Hospitals.

The South Central Louisiana Solid Waste Board
Reason to Eliminate: The functions of the board can be absorbed by the Louisiana Department of Environmental Quality. 

The St. Tammany Environmental Services Commission
Reason to Eliminate: The commission is inactive and its functions can be absorbed by the Department of Environmental Quality and the Environmental Services Department of St. Tammany Parish.

The Technology Innovations Council
Reason to Eliminate: The council’s functions can be absorbed by individual state agencies.

The Uniform Payroll Insurance Committee
Reason to Eliminate: The committee is inactive.

The Louisiana Unmarked Burial Sites Board
Reason to Eliminate: The board is inactive and its function overlaps with the Louisiana Cemetery Board and the State Department of Archeology.

The Washington Parish State Park Steering Committee
Reason to Eliminate: The original mission of this committee has been completed.

EXTENDING SIX EXISTING TAX CREDITS

At today’s press conference, Governor Jindal also announced that he will work with the legislature to extend six existing tax credits that are vital to the growth of Louisiana’s economy, especially at this time of uncertain national conditions. The six tax credits include four entertainment industry tax incentives and two innovation tax incentives.

Governor Jindal said, “Extending these existing tax incentives is vital to keeping our economy growing. We know that states all around us already have many of these incentives on the books – and those who don’t are quickly catching up. As states look for other ways to grow their economies and support their existing businesses and industries in an effort to create more jobs, it’s critical for us to remain competitive. Extending these tax incentives is one more solid step toward making Louisiana the best place in the world to raise a family, to get a great education and to pursue a rewarding career.”

The four entertainment industry tax incentives include the Motion Picture Investor Tax Credit, the Targeted Motion Picture Infrastructure Tax Credit, the Digital Interactive Media Production Tax Credit, and the Sound Recording Investor Tax Credit. The two innovation tax incentives are the Research and Development Tax Credit and the Angel Investor Tax Credit program.

Entertainment Industry Tax Incentives

The first of the four entertainment industry incentives is the Motion Picture Investor Tax Credit. Governor Jindal said this incentive is scheduled for a gradual phase out. Currently, the incentive is at 25 percent, but is set to drop to 20 percent in July 2010 and then down to 15 percent in July 2012, where it would remain indefinitely unless changes are made. Governor Jindal proposes to extend the Motion Picture Investor Tax Credit by two years.

Governor Jindal said, “We must extend this incentive to continue to compete for investment from the movie industry. The success of this incentive program has cultivated film investment statewide.”

Governor Jindal cited an analysis from the Economics Research Associates that reported that the film production industry spent more than $429 million in Louisiana in 2007, resulting in an economic impact of $763 million during that same year.

The Governor also noted that Louisiana was one of the first states to offer an incentive for film production and the success of these programs has led to film production incentives in now more than 40 states. 

“We cannot sit back now and assume we are at the front of the race,” said Governor Jindal. “Economic competition for this industry is ongoing – and we need to make sure Louisiana keeps its competitive edge for retaining this economic investment in our state.”

In addition to extending the incentive, Governor Jindal said there should be several targeted technical improvements made to the existing law by tightening the requirements that are used to certify film production spending, and beginning a “Louisiana Entertainment” branding component for productions receiving the tax credit. 

Governor Jindal said these changes will improve the efficiency of the incentive program while allowing the state to take advantage of the marketing opportunity presented because of the large audiences who ultimately view the movies being made in Louisiana.

The second entertainment industry tax incentive being extended is the Motion Picture Infrastructure Tax Credit. Governor Jindal proposes to extend and strategically target the Motion Picture Infrastructure Tax Credit program toward priority investments in film facilities.

The Governor said that the film production infrastructure in Louisiana previously used state incentives to build out capacity for their production work all across the state. Further, he said infrastructure development has been heavily focused on certain specific parts of production and gaps still exist for future infrastructure.

In order to better-target future infrastructure development in Louisiana, Governor Jindal said he will work with the legislature to strategically target local government priority projects.

According to a report by the Economics Research Associates, the Governor said Louisiana’s previous film infrastructure tax credit generated more than $28 million in 2007 and supported approximately 240 jobs throughout the state. 

Governor Jindal said, “Extending this incentive will help keep this growth going and we will work with legislators to better target economic investment in priority projects in local communities.”

The third entertainment industry tax incentive is the Digital Media Production Tax Credit, a program for video game development, animation, and special effects projects. Governor Jindal proposes to eliminate this incentive’s sunset that is scheduled at the end of 2009.

For each relevant project, current law provides a 20 percent tax credit for the first two years of development, a 15 percent tax credit for the second two years, and a 10 percent tax credit for the fifth and six years. However, under current law, a project must be certified by January 2010 to qualify for this program.

The Governor said that digital media is a key emerging industry sector for Louisiana because of its growth potential and jobs that are stable and high-paying.  In order to continue the digital media industry’s investment and growth in Louisiana, the Governor supports eliminating the sunset provision for the Digital Media Production Tax Credit.

Governor Jindal said, “By eliminating this sunset provision, and cultivating the growth of the digital media industry – which we have already attracted through EA’s recent move – combined with enhancing our workforce development efforts to give this industry the skilled workforce they need, we can develop the digital media industry into a long term major economic engine in Louisiana.”

Electronic Arts (EA) established its first quality assurance center in Baton Rouge and recently indicated that it will be their only U.S. facility that will not be scaled back given the current economic climate.  The unique partnership includes collaboration from LSU which will add to the industry’s future workforce development efforts. The Governor said EA indicated that the digital media tax credits were a key consideration in deciding where to locate.

The fourth and final entertainment industry incentive is the Sound Recording Investor Tax Credit. Governor Jindal supports extending this tax credit through the elimination of the sunset provision, which is set for January 2010.

The Governor highlighted the key role that the sound recording industry places in Louisiana’s entertainment industry, especially considering the state’s musical heritage.

Governor Jindal said by eliminating the sunset provision, the state will position itself for more long-term growth in the field. Further, the Governor noted that while the Sound Recording Investor Tax Credit is a relatively new incentive program, it has already supported more than $1.5 million in sound recording investments in Louisiana – resulting in approximately $388,000 in credits in the last two years. Currently, there about 30 projects in the pipeline for a total projected investment of more than $5 million through this program. 

Innovation Tax Incentives

The Governor also announced his efforts to extend two Innovation Tax Incentives – the Research and Development Tax Credit (R&D Tax Credit) and the Angel Investor Tax Credit.

Governor Jindal proposes to extend the R&D Tax Credit – which is set to sunset at the end of 2009 – by five years.  The Governor said that currently Louisiana ranks third lowest in the nation and last among Southern states for R&D activity as a percentage of the overall state economy.

Governor Jindal said, “Louisiana cannot afford to let this R&D Tax Credit expire. Most Southern states - including Texas, Arkansas, and Mississippi - offer some form of R&D incentive, and we must compete for this economic investment.”

The Governor said that the top six industries using R&D tax credits in Louisiana today are chemicals & petrochemicals, information technologies, environmental technologies, shipbuilding, transportation, and wood, and paper.

The program piggy-backs off of the federal R&D credit and offers transferable credits for a company’s qualified in-state research expenditures at a rate of 8 percent for companies with 500 or more employees, 20 percent for companies with fewer than 500 employees, and 25 percent under an alternative incremental formula. The tax credit also enables recipients of the SBA’s Small Business Innovation Research or Small Business Technology Transfer grants to receive a transferable credit worth 20 percent of the expenditure from their award.

Governor Jindal pointed out that since the inception of the current R&D Tax Credit program, demand for credits and the number of participating companies has increased dramatically. Companies ranging in size from less than five employees to thousands of employees, across a variety of sectors, have taken advantage of the program, including Dow Chemical and Albemarle, as well as early-stage entrepreneurial businesses like nano-technology company, Mezzo Technologies.

Finally, Governor Jindal called for a five-year extension of the Angel Investor Tax Credit – which is currently set to expire at the end of 2009.  The Angel Investor Tax Credit is a state incentive passed in 2005 with the objective of increasing levels of angel investment by offering a 50 percent refundable credit on investment as a fundraising tool for early-stage, entrepreneurial firms seeking investors.

Governor Jindal said, “We know angel investment is critical for diversifying our economy and supporting early-stage business ventures.”

According to the Kauffman Foundation, angel investment accounts for up to 90 percent of early-stage equity not provided by friends or family.

The Governor said that Louisiana offers one of the most competitive angel investment incentives among Southern states – including North Carolina and Virginia – in terms of return for the investor and amount of credits available. 

“By extending this program, we will sustain increasing levels of angel investment currently underway in the state and help cultivate future economic growth,” said Governor Jindal.

Additionally, Governor Jindal said the state should increase the leverage of private sector dollars by gradually phasing down the state’s share from 50 percent to 30 percent over the five-year period.

The Governor highlighted that the Angel Investor Tax Credit program is successfully meeting its goals. Specifically, levels of qualified angel investment have tripled over the life of the program thus far, and the number of angel investors has doubled.

Businesses currently benefitting from the program include video-game developer Nerjyzed Entertainment, security compliance software provider Trace Security, and specialty food safety and healthcare chemical producer SteriFx.

The Governor said that renewing the credit with a gradual phase-down to 30 percent of state investment will enable the state to further leverage private dollars for each dollar of the tax credit without hurting the overall levels of investment and without changing the overall cost of the program.

Key stakeholder companies have indicated to the state that offering a return on investment is more important than offering a high 50 percent return. In fact, angel investors in 2007 and 2008 received a lower credit value than 50 percent, due to the state pro-rating credits to avoid exceeding the $5 million annual cap.

Governor Jindal said the Department of Economic Development will address this issue going forward by altering the administrative rules to grant credits annually on a first-come, first-serve basis.

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