Legislative Post Audit: HPIP and two housing tax credits generate economic activity but may cost state revenue

An auditor from Legislative Post Audit told the Senate Assessment and Taxation Committee that several long-standing and recently created tax-incentive programs produce measurable economic activity but can create substantial, multi-year state revenue obligations.

Josh Luthai, an auditor with Legislative Post Audit, reviewed the High Performance Incentive Program (HPIP) and two state housing tax-credit programs. He said HPIP (created in 1993) offers three benefits: a tax credit equal to 10% of qualifying capital investment (carryforward up to 16 years), a sales-tax exemption for project-related purchases, and a training credit capped at $50,000 per year that cannot be carried forward. "We estimated the HPIP program will generate about $3 in economic activity for every dollar in tax revenues the state gives up," Luthai said, "but we also estimated the program will generate about 35¢ in tax revenues for every dollar in tax revenues the state gives up." He noted that…