Near the end of his eight years as Louisiana governor, Bobby Jindal, a tax-slashing conservative and presidential hopeful, acknowledged that the state's business tax breaks had gone too far.
"The truth is, we have a system of corporate welfare," Jindal said during an April speech to legislators.
The comment resonates now as the state faces its worst budget crisis in three decades - largely because of the soaring cost of subsidies, as well as personal income tax cuts, championed by Jindal.
Business tax subsidies peaked in 2012, when the state exempted 88 percent of corporate income taxes, or about $1.8 billion. It has exceeded 80 percent since then, according to the Louisiana Department of Revenue.
In 2008, when Jindal became governor at 36, he was a rising GOP star, often mentioned as a potential presidential candidate. He cultivated that image, staking his political fortunes on a platform of slashing taxes, dismantling big government and attracting business.
The next year, Jindal helped push through legislation to cut personal income taxes and worked to enhance Louisiana's already robust corporate tax breaks.
In July of 2009, he signed bills that created or expanded nine tax credits to sectors including film, port cargo and infrastructure. The credits are typically worth 20 to 40 percent of a company's in-state spending, or in some cases spending on payroll or research.
In all, annual corporate tax exemptions rose during Jindal's term by about $1 billion, to $1.96 billion in 2014, according to state data.
Many of Jindal's political successes had consequences for Louisiana's budget. A state-commissioned study found that film tax credits, for example, cost the state an estimated $171 million in 2014.
Falling oil prices and personal income tax cuts also played major roles in the crisis, according to state data. Oil-related revenues are projected to drop by nearly $400 million this fiscal year, the data shows. Personal income tax breaks pushed by Jindal and predecessor, Democrat Kathleen Blanco, reduced revenues by about $800 million annually, said Albrecht, the state economist.
As Louisiana faced mounting shortfalls, Jindal sought solutions that didn't involve raising taxes.
“Despite the fact that the state was hemorrhaging money, he just wanted to keep his tax virginity” for his presidential campaign, said Edward Chervenak, a political science professor at the University of New Orleans, echoing a theme common among Democrats and Republicans alike in the state.
Having signed a pledge not to raise taxes, Jindal turned to one-time fixes, such as offering tax amnesty to delinquent taxpayers and raiding state trust funds. That included drawing down $520 million from the Medicaid Trust Fund for the Elderly and $540 million from a reserve fund for state employee healthcare, according to Republican state Treasurer John Kennedy.
Jindal failed last year to sell the state's tobacco settlement, worth $1.2 billion over time, for an upfront lump sum of $750 million - a move Kennedy compared to "a junkie selling his TV or smartphone to buy another fix."
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