Fiscal instability and shaky tax system working against economic development in state

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Louisiana has been eliminated from a list of states that are being considered as the site for a $1.6 billion auto manufacturing plant. That announcement is disappointing but should not be surprising to state government and economic development leaders here.

The Wall Street Journal reported earlier this month that Toyota and Mazda have narrowed their site selection search to 11 states, including Alabama, Florida, Kentucky, Mississippi, North Carolina, South Carolina and Texas in the southern region.

Falling out of the competition for an industry that will open by 2021 and create 4,000 jobs was another serious economic blow for Louisiana, which has one of the nation’s highest unemployment rates and lowest personal income levels.

Louisiana Economic Development Secretary Don Pierson said his agency markets industrial sites across the state, and he cited Louisiana’s infrastructure, workforce and workforce development programs as incentives for companies to locate here.

But that assessment might be overly optimistic in light of the fact that Louisiana roads and bridges are rated among the worst in the nation. There is currently a $13 billion backlog in highway maintenance and construction programs.

Industries like an automotive assembly plant need modern and efficient transportation systems to ship and receive materials, supplies and products. Louisiana’s transportation system has not kept pace with those in most other states.

With one of the lowest educational attainment levels in America, Louisiana’s workforce is not adequate to supply the thousands of skilled workers needed for plants that require large numbers of highly-trained and educated employees.

Colleges and universities in Louisiana that have developed good workforce development programs have been hit with deep and continual state budget cuts that curtail their efforts to produce the numbers of graduates needed for jobs in new high tech businesses and industries.

Tax incentives are a major factor in attracting industries like the Toyota-Mazda plant. Louisiana faces a $1.5 billion deficit in state government next year, and that instability in the tax base is a major concern for prospective companies.

Sen. Norby Chabert of Houma said in response to news of the state’s failure to make the cut for the auto plant that he might offer legislation to restructure Louisiana’s economic development agency and transportation department.

He and other legislators should also address a shaky tax system and other factors that create continuing fiscal instability in state government that undermines economic development efforts.