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COMPREHENSIVE
ECONOMIC DEVELOPMENT STRATEGY
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COMPREHENSIVE
ECONOMIC DEVELOPMENT STRATEGY
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Factors that Directly Affect Economic Performance Business taxes: Several of Louisiana’s unique business tax laws continue to adversely affect economic performance; namely, the inclusion of debt when calculating franchise taxes for corporations and charging the full amount of State and local sales taxes for equipment and fixtures used in manufacturing. To some extend these drawbacks are mitigated by a manufacturer’s use of the state’s Enterprise Zone and AValorem Tax Exemptions, if a company is aware that the can file for these exemptions. While all companies considering locating a facility in Louisiana are made aware of these exemptions, many existing smaller firms have no idea of their availability. Concern has been expressed about these “unique” taxing policies at a high level of State government and there is talk of bringing Louisiana’s corporate franchise tax and sales tax collection in line with the rest of the United States. Renewal Community: The availability of the North and Central Louisiana Rural Renewal Communities program is a mixed blessing. Eight of the rural parishes in Northwest Louisiana are included in the RC program, either in whole (Red River, Bienville, and Claiborne Parishes) or in part (selected census tracts in Webster, Sabine, Natchitoches, Lincoln, and DeSoto Parishes). These areas qualified for the RC program due to a high poverty and unemployment rate. The RC program offers federal tax credits for wages, accelerated depreciation, and other tax credit benefits to entice companies to located or expand operations in these areas. Cost and Availability of Business Insurance: The high cost and, in some cases, the unavailability of obtaining business insurance including general and product liability is a cause of concern for area manufacturers. As an example, a tenant in CDC’s Metro/Regional Business Incubator saw his general liability insurance premium rise from $2,700 annually to $7,500 annually from Feb. 2001 to Feb. 2002. As he attempted to renew his insurance for 2003, he was told that the underwriter would not renew his policy in Louisiana; however, if he moved to Texas or Arkansas, he could have the same coverage for $4,000 a year. The company was finally able to find an insurer that would provide the coverage, but the cost was appreciably higher while the amount of sales covered was greatly reduced. This has become a widespread problem in Louisiana as more insurance companies have moved out of the state. Discussions with state officials, from representatives of the Governor’s office to legislators, have not lead to any solutions or possible remedies for the foreseeable future. In this region, financing is needed for the establishment of new businesses, expansion of existing businesses, creation of employment opportunities and to save existing jobs. Generally, the types of needs for financing include working capital, leasehold improvements, real estate, construction, renovation, inventory, accounts receivable, and machinery/equipment/fixtures. Start-up companies in Northwest Louisiana suffer from a lack of available financing opportunities. Area banks are restricted and/or reluctant to lend to start-up businesses, especially if the entrepreneur does not have significant personal asset collateral. In the majority of start-ups in this region, either the prospective owners do not have sufficient personal net worth or they are unwilling to pledge the personal assets necessary to secure financing. Venture capital is very limited in availability in this region, particularly for small business start-ups. This fact is particularly true with respect to new businesses that intend to utilize new technologies. Business financing is available through commercial lending, government guarantees (i.e., SBA 504, 7A, and LEDC); the USDA Intermediary Relending Program; the Red River Valley BIDCO, Inc.; the Tri-District Development Corporation (TDDC) Revolving Loan Fund; industrial bonds; and venture financing. Financing is achieved through traditional financial institutions, quasi-public agencies, industrial bonds, and venture financing. Venture financing is rarely used in the region because this type of activity is not common and there is still no established structure to develop this type of financing currently. Smaller banks operate with smaller limits and look
to programs such as TDDC to leverage investments and extend the financial
institutions’ available loan funds. Participation by the TDDC may be the
final element to fund a project so as to reduce the equity injection for
the borrower. Two interstate Highways serve the Northwest Louisiana region. Interstate Highway 20 runs in an east-west direction from the eastern boundary of Lincoln Parish, through the Parishes of Lincoln, Bienville, Webster, Bossier, and Caddo to the State’s boundary with Texas. It passes through the Cities of Ruston, Minden, Bossier City, and Shreveport. Interstate 20 continues west to Dallas, where it connects with many other Interstate Highways. It continues east to Jackson, Mississippi and Atlanta Georgia. Interstate Highway 49 runs in a north-south direction from Shreveport, Louisiana to its junction with Interstate Highway 10 in Lafayette, Louisiana. It runs through the Parishes of Caddo, DeSoto, and Natchitoches. There are plans to extend Interstate 49 northward from Shreveport to Texarkana, Arkansas, where it will join with Interstate Highway 30. Construction on this portion of I-49 is underway from Texarkana to the Arkansas-Louisiana boundary. Another Interstate Highway has been planned that will pass through Northwest Louisiana. Interstate Highway 69 will run from the United States border with Canada to the border with Mexico and pass through this region. Much of its precise route for this area has not been determined. It is expected to enter the region along the northern boundary of either Claiborne Parish or Webster Parish and continue in a southwesterly direction. It will cross Interstate Highway 20 to the East of Bossier City and pass along the southern side of Shreveport near the Port of Shreveport-Bossier. From there, it will continue westerly or southwesterly and cross into Texas along the western boundary of southern Caddo Parish or northern DeSoto Parish. Aside from the interstate highways and some urbanized areas, the region has very few four lane highways. Work continues on the expansion of U. S. Highway 171 to four lanes from Shreveport to Lake Charles. This highway has been four-laned from Shreveport to just north of Mansfield in DeSoto Parish and from Noble to Zwolle in Sabine Parish. Additional construction is underway in Sabine Parish. There are a number of planned four-laning projects for the region. Louisiana Highway 1 has already been four-laned from the Shreveport-Bossier Port to a point north of Shreveport and south of Mooringsport. The plan is to expand it to four lanes all the way to the point at which it exits into Texas at the northwest corner of the State. U. S. Highway 371 runs from Interstate 49 in DeSoto Parish to the Arkansas boundary at Springhill, Louisiana and it is hoped that this highway can be four-laned through its entire length through southwestern Arkansas and into Oklahoma. There are plans to expand U.S. Highway 79 to four lanes from Minden, Louisiana to the point at which it enters Arkansas north of Haynesville in Claiborne Parish. The path for a bypass around Homer, Louisiana has already been cleared. There are also plans to four-lane U.S. 84 in Natchitoches Parish, and Louisiana Highway 6 in Natchitoches Parish and Sabine Parish. There are two ports located along the Red River. The Port of Shreveport-Bossier is on the west side of the Red River and is located immediately to the south of Shreveport. The Natchitoches Port is on the East side of the river and is located between Natchitoches and Campti. Although the Natchitoches Port is newer, both ports are still developing their adjacent industrial park and port facilities. Plans are now underway for construction of a port in Red River Parish. There are railroads in every parish in Northwest Louisiana. Some are small lines connecting local areas with major railroad lines, but many are major lines providing freight service in every direction. A number of industrial parks are located adjacent to railroads and some have rail sidings. There is no rail passenger service in Northwest Louisiana. Airports are scattered throughout the Northwest Louisiana region. Rural airports with varying quality of landing strips and facilities are located at Vivian, Springhill, Homer, Ruston, Minden, Coushatta, Natchitoches, Many, and Mansfield. There are two airports in Shreveport, the largest of which is the Shreveport Regional Airport with modern facilities and several commercial airlines providing regular service. In Northwest Louisiana’s metropolitan areas, electricity costs are among the lowest in the nation and this is often used as an inducement to attract manufacturing operations. In many rural areas served by smaller companies the rates tend to be higher. The costs of natural gas are no higher in this region than others across the south. With respect to property taxes, only the local and parish governments levy property taxes in Louisiana. There is no state property tax, so millage varies from parish to parish and even within different parts of a single parish. Parish Tax Assessors are required by law to assess industrial property at 15% of fair market value (land at 10%). Private residences are assessed at 10% of fair market value. There is no property tax on the first $75,000 of an individual’s private residence. Because of the high homestead allowance for individual private residences, the bulk of the taxes generated by property taxes are borne by the business community. The State sales tax is four percent. Municipal and Parish governments are allowed to charge a sales tax. Therefore, the combined sales tax rate ranges from 6.25% to 9%, depending on the Parish and municipal taxes. Local communities complain that Internet sales are causing them a great loss of revenue. Because of this, Louisiana has joined some 32 states in examining the possibility of streamlining their tax systems so that they can go to Congress with a unified voice to advocate for a universal law which will allow states to collect sales taxes on Internet and catalog sales in the future. Also, the State charges corporations operating in Louisiana an income tax and a franchise fee. The largest land uses in Northwest Louisiana are forests and agriculture. The region is mostly rural. Very few land use controls are exerted in the region. Zoning ordinances and subdivision regulations are strongly enforced in Shreveport, Bossier City, and several of the larger municipalities such as Ruston, Minden, and Natchitoches. Even a few smaller municipalities enforce zoning. Although several parishes have zoning ordinances in place, they are seldom enforced. It should be noted that land use controls are currently used to protect the value of property rather than to promote economic development. One form of land use control that is starting to be taken a bit more seriously is that associated with flood ordinances. Every Parish in the region has designated flood hazard areas. As such, they are required to have flood ordinances in place, as are any municipalities that have designated flood hazard areas. Most of the parish governments have finally begun to take their responsibilities under these ordinances more seriously than in the past. Unfortunately, there are still some municipal governments that have little or no interest in enforcement of their own flood ordinances. Most parishes have one or more industrial parks set aside for industrial development, and it could be said that this is a form of land use control which promotes economic development. However, no region-wide land use criteria have been developed since the district’s Land Use Plan was printed in 1978. This document is now considered to be out of date. The Coordinating
and Development Corp. |
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