LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 45 HLS 201ES 68
Bill Text Version: ORIGINAL
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 8, 2020 2:45 PM Author: DUPLESSIS
Dept./Agy.: Revenue
Subject: New Markets Tax Credit Program Analyst: Greg Albrecht
TAX CREDITS OR -$60,000,000 GF RV See Note Page 1 of 1
Provides relative to the Louisiana New Markets Jobs tax credit (Item #19)
Present law variations of this program have provided tax credits against income tax, franchise tax, and premium tax for
investments in Community Development Entities (CDEs) organized to participate in the federal New Markets Tax Credit
Program. Tax credits are percentages of the investment in a CDE that are used to make subsequent investments in qualified
businesses in the state. Credits are nonrefundable but are transferable. In the last three versions of the program, a total of
$124.750 million of tax credits have been issued.
Proposed law provides $60 million of transferable premium tax credit (60% of $100 million of capital allowed into the
program). The capital/credit allocation will be made on 8/1/2020, allocating $100 million of capital and generating total tax
credits of $60 million. Associated tax credits can be claimed evenly over four years, beginning in the fourth year after the
capital allocation. First credit claims can occur in FY24 and last through FY27. Effective July 1, 2020.
EXPENDITURES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 ($15,000,000) ($15,000,000) ($30,000,000)
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 ($15,000,000) ($15,000,000) ($30,000,000)
EXPENDITURE EXPLANATION
In the past the Department of Revenue has indicated that it has devoted a full-time position to administer this program. This
bill is unlikely to require resources beyond that. However, with this bill there will effectively be multiple programs being
administered simultaneously, with different sets of program parameters. The bill retains the Revenue Department as the
program administrator but provides premium tax credits. Thus, some coordination with the Insurance Department will be
required and may add to administrative costs.
REVENUE EXPLANATION
The bill structures the issuance of $60 million of tax credits in a single allocation on August 1, 2020, and provides that this
issue can first be claimed against tax liabilities four years after the credit issuance. Thus, premium tax liabilities for 2023,
filed in FY24, are first affected. The amount of tax credit that can be taken each year is also structured to be 1/4 of the
credit issuance. The State New Markets Tax Credit Programs have typically been fully subscribed. Thus, FY24 is exposed to
$15 million of premium tax revenue loss (first 1/4 of $60 million of total credit issued). Then FY25 through FY27 are each
exposed to $15 million of premium tax revenue loss (2nd, 3rd, and 4th shares of $60 million of total credit issued).
Total state premium tax revenue losses are $60 million, spread over four years, but with a delayed effect at the outset of the
program.
Annual realization of the credits is limited to the premium tax liability of the holder of the credits. However, the credits are
transferable to other premium taxpayers and a ten year carry-forward period is allowed for unused credits. Thus, it is likely
that annual realizations will approximate the annual exposures in the table and discussion above.
Total tax credits claimed under the New Markets Tax Credit program (income, franchise, and premium) have totaled $149.6
million, prior to the additional $60 million of credit provided by this bill. With this bill, a total of $209.6 million of tax credits
will have been issued through the state’s program.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
John D. Carpenter
13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB45 Original: 47:1(B)