Louisiana Economic Development Secretary Stephen Moret says a major project proposed for Lafayette is one of 15 in jeopardy across the state if the Legislature cuts the megafund.
Last week the House Appropriations Committee amended House Bill 1, the $25 billion state spending plan for the fiscal year that starts July 1, to eliminate $81.8 million in existing funding for Louisiana’s Mega-Project Development Fund. With site location decisions anticipated in the next two to four months on all 15 of these major projects, the change threatens every high potential mega-project LED is actively pursuing.
The Mega-Project Development Fund is for projects that generate at least 500 direct new jobs and/or $500 million in capital investment.
Moret says those 15 projects — Louisiana has already been selected a finalist in all of them — could potentially mean more than 27,000 jobs for the state.
“We are in the finals for a major headquarters project in Lafayette right now for which a final company decision is anticipated in the next few weeks,” Moret told The Independent Friday morning. “We will lose that project and more than 500 jobs if the mega fund is not restored.”
Moret noted that the proposal would eliminate money that was appropriated into the Mega-Project Development Fund a year ago. "Specifically, they are proposing to eliminate funds that already have been pledged for major business expansion and recruitment projects," he says. "This is an important distinction because LED’s proposals for large business expansions and recruitment projects typically are explicitly tied to the available dollars in the Mega-Project Development Fund."
Moret says policy reforms implemented by Gov. Bobby Jindal and the Louisiana Legislature over the last few years have resulted in the state now having the strongest pipeline of mega projects in its history. “Collectively, these projects could produce more than 9,000 direct jobs and 16,500 indirect jobs, for a total potential job impact of roughly 25,500 new jobs in Louisiana. The companies involved are considering sites in virtually every region of Louisiana, including Lafayette, Shreveport/Bossier, Monroe, Alexandria, Southwest Louisiana, Baton Rouge and the New Orleans area,” he says.
Although the state will not land all of these projects, LED estimates that it’s very likely Louisiana could win as many as half of them. “My best forecast today is that we would secure roughly five to seven of those projects that would generate about 10,000-15,000 new jobs (including direct and indirect jobs), assuming the mega fund dollars are restored," Moret says.
"Seven of these projects would represent huge expansions of existing Louisiana manufacturing facilities or corporate headquarters, and the remainder would represent huge new corporate investments in Louisiana,” he adds.
The heads of Louisiana’s eight regional economic development organizations have joined Moret in fighting the cuts. In a May 23 letter to the Legislature, those economic development chiefs wrote:
Raiding the Mega-Fund is a declaration of war on job creation in Louisiana. Should this action stand, voters will see it as the most harmful anti-jobs action of the Legislature in this century. Today, the top concern shared by all Louisiana voters is jobs. Louisiana has suffered from slower job growth than the rest of the South over the last decade. Louisiana simply cannot afford to take an anti-jobs stance.
Left in its current posture, this budget action poisons Louisiana’s new reputation as a great place to do business. As LED has stated, these dollars have been pledged in good faith as part of recruitment incentives to locate in our state. Flip-flopping on the state’s pre-existing commitment to the Mega-Fund sends a damaging message to site-selection professionals that Louisiana cannot be trusted in project negotiations.
They also note that the LED budget was further cut by an additional $3 million and that LED has already taken a deep share of agency cuts in the past few years.
Moret maintains that additional HB1 amendments to LED’s budget would result in a significant reduction in funding for small business development centers, business retention programs, regional economic development organizations, international trade promotion, and workforce training, as well as the marketing of Louisiana for new business investment.
Even if the decision is reversed, Moret maintains damage has been done. "Louisiana’s competitive position already has been weakened for all of our current prospects because the committee vote [and subsequent House approval of the budget] calls into question the Legislature’s commitment to the existing funding for the Mega-Project Development Fund," Moret says. "Additionally, the proposed cut would eliminate any possibility of securing the future of the GM-Shreveport facility as an automotive assembly facility.”
HB1, the $25 billion state operating budget, was passed by the House late Thursday night, and the budget bill now goes to Senate Finance Committee. Moret is expected to testify Monday (the committee is planning to hear testimony on Memorial Day).
Read The News Star’s compelling case for why the cuts would hurt the state and kill the Next Autoworks project (formerly V-Vehicle) in Monroe here.