After Katrina: partly truth, partly fiction

By G. Phillip Shuler

After Katrina, governments and elected officials have been very active, perhaps too active, in proposing, promulgating and enacting various remedies to counteract the catastrophe that has swept over us.

Here is a listing of them as we go to press. Let us hope that, like the man who tried to kill himself and having failed decided to give living a shot, it will be the flood that saves New Orleans: the waters having done to the public schools and housing projects what the government should have already done. New Orleans can now build a city worthy of its history.

To date, Governor Kathleen Blanco has not issued any executive orders directly pertaining to the construction industry within the state of Louisiana. Her executive order extending prescriptive periods and limiting peremption and preemption did not include public construction contracts (Title 38 of La. Revised Statutes). Her executive order has been amended by the Louisiana Supreme Court.

In a Sept. 18 meeting, the Louisiana State Licensing Board for Contractors voted to waive the standard 60-day waiting period for contractors wishing to become licensed in Louisiana, and will reciprocate with all states who license contractors on a case by case basis. Prior to Katrina, reciprocity was only extended to Alabama, Arkansas, Mississippi, North Carolina, Tennessee and Utah.

The Louisiana State Licensing Board for Contractors' Web site details emergency changes in the licensing process.

Governor Blanco, in Executive Order Number KBB 2005-27, has relaxed the requirements for state purchasing of goods and services.

Additionally, Governor Blanco has publicly indicated that she hopes to institute various initiatives aimed at luring people and business back to the New Orleans area. She has suggested a multiyear "tax holiday," up to as much as 50 percent of federal income tax, for individuals who work in the impacted area.

She has also suggested establishing a one-time small business interruption tax credit of $1,000 per employee up to $100,000 that would apply to businesses that relocate to the impacted area. Blanco has also suggested a 15 percent tax credit, to extend until 2008, for capital invested in businesses in targeted high-growth, high-wage sectors in the Katrina-impacted area.

Finally, she would like to provide a worker opportunity tax credit for businesses for 80 percent of qualified wages earned in the Katrina-impacted areas through 2010. This credit would be limited to $40,000 per employee.

On the local front, New Orleans Mayor Ray Nagin has proposed a number of tax incentives as well. He has proposed the creation of the Katrina Tax and Jobs Incentive Zone, which would offer a break for companies that presently operate in the city or decide to locate there in the future.

Under this plan, all New Orleans-based businesses would receive a 50 percent federal income tax credit on their total payroll for employees who live and work in the city. This credit would be capped annually at the employer's total tax liability. He, like Blanco, has also suggested a 50 percent federal tax credit on total taxable wages for individuals who live and work in New Orleans.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.