Economic growth in Louisiana dependent on government loans
In Louisiana, 2010 has been an up-and-down economic year. Economic development in the state suffered several major setbacks. By using a combination of tax incentives and short-term loans, though, the state is likely to see slow growth in 2011.
Effect of closures on Louisiana
The biggest hit to Louisiana’s economic development this year was the BP oil spill. When the federal government shut down offshore oil drilling in the Gulf, many workers in Louisiana found themselves unemployed. Employees and businesses have been reliant on emergency loans or remuneration from BP and the federal government to stay afloat. Beyond just the oil spill, NASA, Northrop Grumman Corp. and General Motors have announced shutdowns that will cut 7,500 jobs from the state.
New businesses opening in Louisiana
In some mid-size Louisiana cities such as St. James Parish, Michoud and Alexandria, Louisiana, the economic outlook is not entirely negative. By using a combination of tax incentives and short term loans, the state has attracted some big new businesses. A Nucor Corp. steel plant is expected to open in St. James Parish and employ 1,250 people and spend $3.4 billion in the state. A high-tech wind turbine company is also using Louisiana’s offer of short term loans to help open a wind turbine plant that will employ 600.
New proposed taxes on drilling
The federal government is currently considering $36 billion in proposed taxes on the oil drilling industry. The government has also ordered the industry to spend $4 billion on cleaning up abandoned oil rigs. The relationship of oil companies to the state of Louisiana is a tumultuous one. The industry has spent billions of dollars in the state. At the same time, oil drilling is moving to other countries and not quickly paying up on promises of emergency loans to residents.