LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 452 HLS 23RS 767
Bill Text Version: ENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: May 21, 2023 8:19 PM Author: BOURRIAQUE
Dept./Agy.: LA Housing Corporation/ Revenue/ Insurance
Subject: Low Income Housing Tax Credit Analyst: Benjamin Vincent
TAX CREDITS EG +$5,000,000 GF EX See Note Page 1 of 1
Establishes a tax credit for the development of certain affordable housing projects
Proposed law allows a transferable credit against individual or corporation income tax, franchise tax, or insurance premium
tax liability for eligible expenditures under the federal Low Income Housing Tax Credit (LIHTC) program. Proposed law
specifies that the credit shall be equal to the federal credit awarded. Additionally, proposed law specifies that the total
credits awarded in any fiscal year shall not exceed $5 million, and that no credits shall be awarded after June 30, 2026. A
five-year carryforward is authorized in the event a taxpayer has insufficient liability to exhaust the credit.
The bill additionally specifies that the credit is subject to appropriation, although the method of administrating such a
requirement is unclear.
Effective July 1, 2023, and applicable to tax years beginning on or after January 1, 2024.
EXPENDITURES 2023-24 2024-25 2025-26 2026-27 2027-28 5 -YEAR TOTAL
State Gen. Fd. $5,000,000 $5,000,000 $5,000,000 $0 $0 $15,000,000
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
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
REVENUES 2023-24 2024-25 2025-26 2026-27 2027-28 5 -YEAR TOTAL
State Gen. Fd. ($5,000,000) ($5,000,000) ($5,000,000) SEE BELOW SEE BELOW ($15,000,000)
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
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
EXPENDITURE EXPLANATION
Requires the Louisiana Housing Corporation (LHC) to award credits via an application process, and authorizes a credit
processing fee. Directs LHC to notify the Secretary of Revenue (LDR) and Commissioner of Insurance (DOI), certifying the
award amount. A small number of applicants are anticipated given the $5 million cap, resulting in estimated annual LHC
costs of $15,000.
LFO and LDR note that subjecting a credit to appropriation is an unusual concept for which no known process exists. Credits
typically reduce revenue collections prior to net receipts reporting. Complying with the apparent intent appears to require an
explicit appropriation of the total revenue impact contemplated by year, upon bill effectiveness. This is reflected in the table
above as a general fund expenditure of $15 million, spread over the three years that the credit is available. LFO additionally
notes that it is unclear where these funds would need to be appropriated, as credits are typically allocated out of current
collections prior to reporting of net receipts.
Additionally, both Department of Insurance (DOI) and LDR could incur processing costs (estimated at $50,000 each
annually) to accommodate transferability with both agencies authorized to charge transfer fees in the bill. Cost estimates
assume a tax declaration will be required during the award process to keep the premium tax credits separate from the
income/franchise credits and that no cross-transfers will be allowed.
REVENUE EXPLANATION
Proposed law would effectively double the total tax credit received by LIHTC participants, by matching the federal credit with
a transferable state credit against either individual income, corporate income, corporate franchise, or insurance premium
tax. Credits are allowed for eligible projects in three fiscal years (half of FY24, and all of FY25 and FY26). Proposed law caps
credits awarded by the state at $5 million per fiscal year, and allows no new credits to be awarded after June 30, 2026.
SGF Impacts: Under the expectation of 70 LIHTC participants per year, and an average of a $1 million credit per participant
adjusted for residential construction inflation, LFO anticipates that credit awards in future years would reach the $5 million
maximum in every year available. This would likely happen relatively quickly, as there appears to be far more than $5
million in existing participation in the program that would be eligible for the additional state credit. LFO thus assumes that
the maximum is reached in the six months of FY24 for which the credit is available, in addition to FY25 and FY26. The impact
is reflected in the table above as occurring in the three fiscal years the credit may be issued, however impacts may be
delayed into future years in the event that credits are carried forward.
SGR Impacts: Under an assumption of approximately 5 applicants per year, and LHC’s indicated intention to charge an
application fee of $3,000, fee revenue would fully offset the anticipated $15,000 in LHC expenditures. Additionally, to the
extent credits are transferred, LDR and DOI self-generated fee revenue will increase.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Deborah Vivien
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Chief Economist