Data centers are a threat to state budgets
The landmark deal to build a $10 billion artificial intelligence data center in northeast Louisiana was paved with generous sales and property-tax breaks that are modeled on similar giveaway programs in other states. A new report from Good Jobs First outlines how such tax exemptions are becoming an exorbitant and unpredictable cost for state budgets. Ten states lose more than $100 million per year because of these exemptions, with Texas losing more than $1 billion annually:
The industry’s high-velocity growth, combined with the virtually automatic structure of the state tax exemptions, is preventing states from making accurate cost projections. For example, in the space of just 23 months, Texas revised its FY 2025 cost projection from $130 million to $1 billion. Virginia, Texas, and Illinois have each recorded revenue-loss spikes of more than 1,000% in recent years.
The Times-Picayune | Baton Rouge Advocate’s Stephanie Riegel recently reported how state leaders reworked tax incentives across two legislative sessions to secure the project.
Breakaway cities mean higher taxes for everyone
East Baton Rouge Parish District Attorney Hillar Moore is urging local voters to approve a property tax increase on Saturday that would bolster funding for his office. The proposal is needed to navigate the economic fallout from the new breakaway city of St. George in the southeastern part of the parish. The Times-Picayune | Baton Rouge Advocate’s Patrick Sloan-Turner explains how breakaway cities create higher taxes for everyone:
The problem arises when a major cut impacts the general fund, as it did with St. George’s incorporation. With an estimated $40-50 million hole, the city-parish made sweeping cuts to account for the lost revenue. Some of that budget cut is mitigated by the fact that Baton Rouge is no longer responsible for much of the work done in St. George. But as some Metro Council members point out, that’s not true for the district attorney, prison and other agencies that still serve the whole parish.
Helping pregnant women overcome addiction
Louisiana’s maternal mortality crisis is being exacerbated by the opioid epidemic, as accidental overdoses are the top cause for pregnancy-associated deaths among new mothers in the state. The Times-Picayune | Baton Rouge Advocate’s Emily Woodruff reports on a new program to help pregnant women who are addicted to drugs access crucial services needed to overcome their struggles and ensure a healthy pregnancy:
Through a program called Improving Care for the Substance-Exposed Dyad, the collaborative has pushed hospitals to adopt routine screening for substance use during pregnancy. It also has worked to increase the coordination of care between obstetric and addiction treatment providers, who can prescribe buprenorphine, a life-saving medication that blunts cravings and prevents withdrawal. … Project M.O.M. aims to bring those practices to all 47 Louisiana birthing facilities and emergency departments.
A debate over smoking taxes
Last week, state lawmakers approved a tax increase on vaping products but rejected a similar hike on cigarettes. Louisiana’s cigarette tax of $1.08 per pack ranks 38th nationally. The Times-Picayune | Baton Rouge Advocate’s Tyler Bridges explains the tobacco industry’s behind-the-scenes role in shaping the different outcomes:
(T)he vape tax increase stood a good chance of passage because it had the support of Gov. Jeff Landry, and it was less objectionable to the tobacco companies and convenience store owners. … Landry backed the bill, lobbyists said, because the first $22 million collected by the vape tax would raise salaries for state troopers and the next $6 million would go to the Department of Wildlife and Fisheries, the Office of State Fire Marshal and the State Public Defender Compensation Fund.
Supporters of both proposals testified that raising prices on cigarettes and vapes will reduce usage, improve health outcomes and save Louisiana money in the long run.
“What we’re seeing is real simple,” [Rep. Mandie Landry] said. “The tax goes up, smoking use goes down, health outcomes go up.” Eric Weinzettle with the American Lung Association provided the numbers, saying studies show that every 10% increase in price reduces vaping by 13% to 22%. … Alice Kline, with the American Cancer Society Cancer Action Network, said raising cigarette taxes would save the state money in the form of reduced Medicaid payments.
Number of the Day
8.8% – Percentage share of an average Louisiana household’s income that is spent on groceries per year, which ranks 11th nationally. (Source: Lending Tree)