Jindal Grants Corporate Welfare To Original Healthcare.gov Contractor

This isn’t parody. Bobby Jindal welcome CGI Federal, the company responsible for the total meltdown that was the first month of the Affordable Care Act launch. 

We all recall Jindal’s knee-slapper during the roll-out, right?

Louisiana Gov. Bobby Jindal on Sunday openly mocked the Obama administration’s troubled rollout of its HealthCare.gov website but did suggest a fix — sort of.

Maybe they’ll bring in Al Gore, the guy who says he invented the Internet,” Mr. Jindal said during an interview on “Fox News Sunday.”

Now, Jindal is rewarding the incompetent contractor that caused Healthcare.gov to fall flat out of the gate:

CGI Federal executive James Peake announced in a press conference Monday that the company has selected the UL Research Park to establish a technology center…

CGI, the fifth-largest IT company in the world, selected Lafayette after a two-year nationwide site-selection process, according to a press release. The total investment, including government incentives and contributions, is about $25 million…

LED offered the company a competitive incentive package that includes a performance-based grant of $5.3 million to reimburse personnel relocation, recruitment, training and building operating costs. CGI will receive the comprehensive workforce solutions of LED FastStart and is expected to utilize the state’s Quality Jobs and Digital Interactive Media and Software Development incentives.

Local incentives for the project will include a grant not to exceed $1.1 million from LEDA, for the reimbursement of relocation costs and operating costs in a temporary location.

Ah, good deal. Jindal gives millions to incompetent Canadian contractor while mocking their incompetence.

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Posted on April 30, 2014, in Uncategorized and tagged , , . Bookmark the permalink. 1 Comment.

  1. Greg Foreman

    Has anyone put a pencil to what CGI’s decision to come to Louisiana will cost the state in terms of “lost” or “forgone” revenue via Jindal’s “economic incentives” administered by the Louisiana Economic Development? I have. Now, I’m not saying my analysis is 100% accurate. However, I gladly invite anyone/anywhere to provide “corrections” to this presentation as it applies to the CGI case.
    Portions of this analysis are based on the projected level of employment, 400 persons at full employment, and the average yearly level of income, $55,000. These two factors are critical for calculating, where possible, the negative revenue effect of the plan. I write “where possible” because the ultimate cost of many LED’s incentive” plans are prospective in nature meaning the ultimate “negative impact” to state revenue can not be ascertained until the company commences full operations. However, their existence will be noted.

    Another important fact worth noting is that when an LED incentive grants a tax credit such credits are “refundable tax credits” meaning the state will PAY the amount of the tax credit IRREGARDLESS of whether or not the company owes income taxes.

    Now on to certain LED incentives CGI will benefit from.
    LED’s PAYROLL INCENTIVE PROGRAM grants a 15%, or 15 cents of every gross dollar of payroll REFUNDABLE TAX CREDIT for a period of 10 YEARS! The negative cash will cost lost revenue of $3.30 million dollars yearly or $33.00 million dollars over the ten year life of the incentive.
    LED’S FREE ENTERPRISE ZONE tax credit grants a REFUNDABLE TAX CREDIT of $2,500 per new job created for 10 years and a 1.50% investment tax credit based on total capital expenditures(unknown). This will amount to a negative cash flow of $10 million dollars per year or $100 million dollars over the ten year life of the credit. The 1.50% investment tax credit is prospective in nature.
    LED’s DIGITAL INTERACTIVE MEDIA AND SOFTWARE DEVELOPMENT
    INCENTIVE(DIMSDI) provides three incentive “perks”. First, the incentive grants-depending on whether the company files taxes yearly or periodically-a tax abatement of 100%(yearly filing) or 85%(filing periodically) for any state income taxes owed. In essence, this means the company not pay ANY/NADA/ZERO state income taxes or worse case scenario, will pay a maximum of 15% of its state income tax liability. The second “perk” provided by the DIMSDI incentive is a 35% refundable tax credit based on the companies payroll. In CGI’s case with an average payroll of $55,000, the 35% tax credit breaks out to a tax credit of $19,250 per employee producing a yearly negative cash flow of $7.70 million dollars for 400 employees or $77.00 million dollars over the ten year effective period. The third perk provided under the DIMSDI incentive is another refundable tax credit equal to 25% of qualified production expenses made in Louisiana. Again, such cost is prospective in nature and not currently calculable.
    LED’s INDUSTRIAL AD VALOREM TAX EXEMPTION PROGRAM, ITEP, grants a 100%, ten year abatement of all LOCAL property taxes. This abatement applies to new construction as well additions to existing capital structures. In as much as this “incentive” provides property tax abatement at the parish level, impact to state revenue is negligible. However, no doubt, the ultimate effect of this “perk” will be higher property and sales taxes on parish citizens to compensate for the flat or lost local revenue. After all, corporate property tax collections will not increase when the state is granting 100% tax abatement for any “economic expansion” that finds its way to any given parish.
    Now, in CPI’s case, the negative revenue flow to Louisiana, where calculable(remember certain cost factors are prospective in nature and currently not available)granted under LED’s incentives results in a situation where Louisiana is subsidizing 95.45% of CGI’s average payroll of $55,000. The sum total of the incentives equals $21.00 million dollars yearly, $3.30 million yearly, Payroll Incentive Program, $10.00 million yearly, Free Enterprise Zone tax credit, and, $7.70 million yearly, the Digital Interactive Media and Software Development Incentive. This breaks out to an average of $52,500 in state subsidization of of CGI’s average $55,000 payroll,($52,500/$55,000=95.45%). We should keep in mind two factors concerning the analysis. The above figures-where calculable-represent just the “tip of the iceberg”. Payroll expenses are a small-very small part-of most industrial operations. The negative effect on state revenue from the “prospective” cost of LED’s perks will be “Godzillaly” devastating, if not bankrupting Louisiana.
    The second factor worth mentioning is that CGI is but one of God only knows how many businesses attracted to Louisiana under such costly tax credits, tax exemptions and tax abatements, all providing ten years of tax free benefits for the companies. These “perks”, plus other perks not covered, have produced, will continue to produce “revenue Armageddon” for the citizens of Louisiana for the next ten years. The average citizens of Louisiana will be burdened with increase property, sales, use and excise taxes in order to compensate for “Heir Jindals” economic programs.
    God help Louisiana.

    Like

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