Why the Louisiana New Markets Jobs Act is a smart investment
Ronald Reagan once said, “The best social program is a job.”
The Louisiana New Markets Jobs Act fosters job creation and retention by making private financing available to the best jobs engine in America – local small businesses.
Louisiana New Markets will quickly bring $55 million of private capital for small business financing through a distinct public-private partnership.
The Louisiana program leverages the successful bi-partisan federal New Markets initiative. It requires that the private sector, not government, invest upfront in small businesses throughout the state and maintain those investments for seven years. The cost to the state only begins in the fourth year after the initial private investment. The future, delayed credits represent 15% of the upfront investment and are taken in that amount annually for three years. Arkansas, Mississippi, Alabama and Florida, among many others, all offer competitive versions of New Markets.
Louisiana New Markets provides a dollar-for-dollar federal match with strict state oversight.
Plain and simple, New Markets generates more tax revenue than it costs.
Moreover, the small businesses receiving New Markets investments are permanent enterprises, which will continue to employ people and pay taxes for many years beyond the life of the credits.
New Markets has been proven successful in Louisiana, providing access to capital for local companies, including GAME Equipment in Napoleonville, Morehouse General Hospital in Bastrop, Moran Printing in Baton Rouge, and TurboSquid in New Orleans.
One case in particular illustrates the power of focusing private capital in our low-income communities. A national company explored opening in New Orleans’ Central City neighborhood in the aftermath of Katrina. Due to both the storm’s devastation and the long-term challenges of Central City, a location in the neighborhood did not fit the company’s business model. Yet, New Markets financing helped bring the business into the underserved area, creating jobs and bringing commerce to a long-blighted sector. In addition to the obvious community benefits, the state tax revenues from this business exceed the cost of the credits many times over. Each small business able to grow through New Markets creates comparable positive immediate and long-term effects.
New Markets offers a hand up to job creators by bringing private financing into areas most in need. The State reaps the positive return on its investment through jobs and economic growth.
It’s easy to see that Louisiana New Markets Jobs Act is a smart investment in a stronger, more diverse Louisiana economy.