Governors Plead With Congress For Tax Incentives

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The New York Sun

WASHINGTON – Gulf Coast governors pleaded with Congress yesterday to provide economic and tax incentives to bring back investments and jobs needed for their states to recover and rebuild after Hurricanes Katrina and Rita.


Governor Blanco of Louisiana told the Senate Finance Committee her state lost 25% of its business economy when Katrina hit August 29 and left New Orleans flooded. After Rita hit the western part of the state last weekend, and reflooded parts of New Orleans, Ms. Blanco said the estimated loss increased to a third of the business economy.


“It’s very important to have incentives for our workers to return, and in order to do that, we have to have incentives for business to return,” Ms. Blanco said, asking specifically for business tax write-offs for new investments, low interest bonds for business borrowing, and emergency business loans.


Appearing in person before the panel, Ms. Blanco passed up an opportunity to respond to former FEMA director Michael Brown, who on Tuesday had accused state and local officials in Louisiana of fumbling the immediate relief effort after Katrina, which left hundreds dead in New Orleans.


“We are looking forward, not backward,” she said. At a House hearing, meanwhile, lawmakers decried early signs of abuse in the awarding of billions of dollars in hurricane-related contracts, most without competitive bidding. And a Senate panel heard local officials in Louisiana, Texas, and Mississippi plead for help in caring for hurricane evacuees.


Governor Barbour of Mississippi and Governor Riley of Alabama, testifying before the finance committee via a teleconference hookup, echoed Ms. Blanco’s plea for help in revitalizing their private sectors.


Mr. Barbour also requested expanded business tax write-offs, particularly for investments in new equipment, $15 billion in tax-exempt private activity bonds, and the elimination of capital gains taxes for business investments in the Gulf Opportunity Zone proposed by President Bush.


Mr. Riley said some type of hurricane bond package is needed to help Alabama businesses recover. He also endorsed accelerated tax write-offs for business investments and urged Congress to step in to resolve the growing dispute over whether flood damages are covered by private hurricane insurance.


The finance committee is crafting a long-term package to help the Gulf Coast states recover and rebuild. Congress already has provided $62 billion in emergency aid, and the Louisiana congressional delegation estimated last week that it will take another $250 billion in federal aid for that state alone to recover.


At a Senate Homeland Security and Governmental Affairs hearing, Baton Rouge, La., Mayor Melvin Holden said a quarter million evacuees from Katrina have ended up in his city, more than doubling its size and stressing public services to the limit. The airport, for example, has been the second busiest in the nation for the past three weeks.


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