Price for La. tax break expansion could top $7M


BATON ROUGE, La. (AP) — Louisiana paid as much as $7 million for a two-month expansion of a tax credit designed to encourage the purchase of alternative fuel vehicles, an expansion later rescinded by Gov. Bobby Jindal and followed by the resignation of the state's revenue secretary.

The Department of Revenue issued a little-noticed rule in April governing the state's alternative fuel tax credit, which enlarged the list of qualifying vehicles. Jindal scrapped the rule in June amid complaints it could wreck the state's budget, siphoning millions from the state treasury.

But it appears hundreds of people took advantage of the expanded list while it was on the books.

More than 2,500 claims for the alternative fuel tax credit — totaling $7.4 million — were paid when the expanded list was in effect, according to Department of Revenue data provided in response to a request from The Associated Press.

Revenue spokesman Byron Henderson said the department doesn't know how many of the credits involved car and truck models from the expanded list.

However, at least $3.3 million of the credits claimed were for 1,125 amended income tax returns, a likely indication that taxpayers revised their returns when they learned of the expanded list released in the April 30 rule.

Jindal rejected the rule June 14, though he didn't cite complaints that the tax credit could become a budget-buster. Instead, his office said the rule was jettisoned because the law governing issuance of an emergency rule was not followed.

The governor's revenue secretary, Cynthia Bridges, abruptly resigned the day after the rule was rescinded. She offered no explanation, leading to suggestions she was forced from her job because of the tax credit interpretation.

Rules governing the tax break program are being rewritten, an effort overseen by interim Revenue Secretary Jane Smith, the former lawmaker who sponsored the alternative fuel tax credit in 2009. A request to speak with Smith wasn't immediately returned Monday.

The tax break was designed as an incentive for buying "clean-burning" vehicles or converting cars and trucks to lessen the reliance on gasoline and diesel and encourage alternative fuels, like compressed natural gas and ethanol.

The credit can be 10 percent of the cost of vehicle or $3,000, whichever is less.

The rules approved by Bridges, now rescinded, swept in new "flex fuel" cars and trucks with the ability to burn ethanol.

The price tag for the incentive program has far exceeded initial estimates.

A financial analysis of the bill creating a tax credit for buying alternative fuel vehicles estimated a cost of less than $1 million for the first five years. Instead, it has cost the state more than $24 million since 2009.