Topic:
ECONOMIC DEVELOPMENT

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ECONOMIC DEVELOPMENT BACKGROUND MATERIAL

First, the good news. Louisiana is blessed with vast quantities of natural resources. It straddles the greatest river in North America and is home to 5 of the 12 top ports in the US. Its workers are among the most productive in the nation.

Still, the economy and jobs are among the greatest concerns of Louisiana citizens – and with good reason. Despite its geographic good fortune, a willing workforce - and some recent progress - Louisiana continues to languish at the bottom of many economic, education and quality of life rankings:

How can Louisiana raise itself to the upper tier of states in these important areas? What are the major impediments holding back our economic development, and what role can government play to increase prosperity for all Louisianans?

"Well, I think businesses are interested in finding places where there is a stable workforce, a good tax structure, a good quality of life, an infrastructure that is conducive to getting the product to market."
Jim BRANDT, Public Affairs Council

Opinions vary as to which are the most important issues, but these four are often mentioned as the most pressing: taxes, infrastructure, education and negative perceptions of the state.

TAXES

Louisiana ranks 41st in the Tax Foundation’s State Business Climate Index, which measures the impact on business of five indicators, including individual, corporate and sales taxes.

"We still have a problem with the property tax situation in the state of Louisiana. It’s basically an 85 to 90% tax on business, it is a local tax. The state does not collect a property tax for the reason that we have the industrial tax exemption."
Dan JUNEAU, Louisiana Association of Business & Industry

In spite of Louisiana’s nearly automatic granting of the 10-year industrial property tax exemption, The Public Affairs Research Council points to one study that ranked Louisiana 10th in the nation in the share of total state and local taxes paid by business.

Recent surveys, like one by Site Selection magazine, show the state’s “business climate” is improving, but still lags behind our Southern peers.

In a move to ease the tax burden on capital investments by business and industry, Louisiana has begun to phase out sales tax on machinery and manufacturing equipment, and on debt used to purchase these types of equipment.

Such revamping of tax law should place Louisiana on a more competitive footing for attracting new investments and keeping existing businesses here.

INFRASTRUCTURE

"The lack of attention to our critical infrastructure in this state is a major problem and, unfortunately, we continue to put it off until next year, next year, next year."
Jim BRANDT, Public Affairs Council

Infrastructure literally means “the structure beneath”, and traditionally refers to physical things - like railroads, ports of all types and roads - as well as the complex systems employed to distribute goods and services from point A to point B. About one out of every eight Louisiana workers is directly involved in this core cluster of industries. A case could be made that virtually all other business enterprises depend, to one degree or another, on this single sector for their success.

"We, with the Mississippi River, are sitting on what I consider to be the gateway to the world ... you can bring goods in through the Mississippi River and carry them all the way north right up to the heartland of this country or you can take stuff from the heartland of this country and take it to any other spot in the world."
Sen. Noble ELLINGTON

Logistics and transportation are the historic keystones of Louisiana’s very existence. In a real sense, they are why we’re here. About one out of every eight Louisiana workers is directly involved in this core cluster of industries.

Infrastructures are costly to maintain and update. In a recent report, the nonprofit Road Information Program claimed that traffic congestion and poorly maintained roads and bridges threatened Louisiana’s status as a major gateway for domestic and international commerce.

Louisiana is ranked in the bottom fifth nationally in level of investment in highways, roads and bridges. The state Department of Transportation and Development’s 2003 statewide transportation plan asserts that Louisiana needs to increase spending on roads and bridges by $250 million annually to make needed improvements.

EDUCATION

"It’s right there in the top five as to what businesses are looking for and it starts with Pre-K and goes all the way up the system."
Jim BRANDT, Public Affairs Council

"You can’t have good business growth, you can’t have a good business climate, you can’t have economic development unless you have a quality education system that supports economic growth. Now what do I mean by that? Education has to provide a workforce, business is dependent on a workforce that’s competent, that can do the job."
Rep. Carl CRANE

Unfortunately, with a few notable exceptions, when the subject is Education, Louisiana’s grades are at the bottom of the class. National survey after national survey places the state last, or very close to it.

Louisiana ranks 45th in the high school completion rate for 18 to 24 year-olds. Dropout rates as high as 33% do not bode well in an economy that will need workers with two-year associate degrees or advanced training to fill 65% of the available jobs.

"Training is a very, very big issue. It’s something that I think our state needs to do a better job of getting a handle on: the dollars that already exist for funding."
Dan JUNEAU, Louisiana Association of Business & Industry

Higher education has driven innovation and job creation in a number of Southern states - states that have exceeded our rate of job growth. Louisiana is making moves to marshal the economic potential of universities by parlaying highly technical campus expertise and resources into knowledge-based, commercial spin-off companies.

NEGATIVE PERCEPTIONS

"I think, unfairly, we are still having to live with this image of corruption from past years in this state, some of it from decades and decades ago, that we do have to overcome and we can overcome."
Dan JUNEAU, Louisiana Association of Business & Industry

Environmental concerns that inspired the infamous “Cancer Alley” label still linger, in spite of conflicting statistics and industry efforts to lower toxic emissions.

Louisiana has a reputation for colorful politicians, but a legacy of public corruption does not create a good climate for economic development.

Overcoming negative images of the state will be a difficult, ongoing process. Efforts such as governmental ethics reform may help to create a more favorable perception of Louisiana over time.

In the end, economic development will require making hard choices and maintaining a commitment to achieve the goals we set for ourselves.