WASHINGTON – In an effort to provide additional assistance to the ongoing efforts to rebuild the Gulf Coast in the wake of Hurricane Katrina, senators from Mississippi and Louisiana are pushing to extend tax incentives for new construction in areas devastated by the storm as part of pending economic stimulus package before Congress. 

In a letter to the leaders of the Senate Finance Committee, Senators Roger Wicker (R-Miss.), Thad Cochran (R-Miss), David Vitter (R-La.) and Mary Landrieu (D-La.) asked that bonus depreciation language included in the GO Zone Act of 2005 be modified to eliminate the construction commencement date.  Current law states that in order for bonus depreciation to be utilized, construction projects must have begun by December 31, 2007.  However, due to challenges unforeseen when the legislation was originally passed, many pending construction projects have been slowed and have not been able to fully utilize the bonus depreciation provision in the GO Zone Act. 

“As we debate the specifics of a national economic stimulus package, it is important to remember the ongoing rebuilding efforts along the Gulf Coast and the federal government’s commitment to assist in those efforts,” Sen. Wicker said.  “The bonus depreciation section in the GO Zone Act was a critical part of that legislation.  It should be extended in order to provide those who are trying to rebuild in the wake of Katrina the assistance the legislation intended to provide.” 

Sen. Cochran added, "As we work to improve the growth of our national economy, it is important to recognize the need for economic stimulus in the areas that were ravaged by Hurricane Katrina.  The process of recovering from the largest national disaster in history should ensure that the victims have incentives to rebuild.  The depreciation language that was included in the GO Zone Act should be extended.”

“The bonus depreciation benefit included in the GO Zone Act is one of the most significant aspects of the GO Zone program,” said Sen. Vitter.  “However, rising costs, bureaucratic red tape and other issues have resulted in significant construction delays, and we have yet to see the full effect of this benefit.  As we work to include additional incentives for economic growth and new jobs in the stimulus bill, we should include this extension for the GO Zone to ensure that our recovery efforts can continue unimpeded.”

“As we recover from the 2005 hurricanes, we must give businesses incentive to continue to invest in the Gulf Coast,” said Sen. Landrieu.  “This provision will give our businesses more time to take advantage of tax breaks, providing them a much-needed boost and helping the economy along the entire Gulf Coast rebound.”

Text of letter:

         
January 28, 2008

Dear Chairman Baucus and Ranking Member Grassley,

As you consider a 2008 economic stimulus package, we request that you modify the existing bonus depreciation language included in the GO Zone Act of 2005, by eliminating the construction commencement date of December 31, 2007. 

The tremendous destruction of the Gulf Coast following Hurricane Katrina brought with it an unprecedented need for economic assistance, which Congress responded to with an incentive package to stimulate recovery.  Unfortunately, the bonus depreciation piece of this package has not been fully utilized.  Currently, the commencing date for construction eligible for GO Zone bonus depreciation is December 31, 2007.  However, replacing the basic infrastructure needed to begin this construction has been slow and difficult.  New environmental standards, building codes, and unending FEMA bureaucracy have delayed utilization of this key provision.  Many projects are planned, but these delays have resulted in few actual construction starts.

Therefore, we respectfully request that as you formulate the upcoming economic stimulus package, provisions be included to eliminate the commencing date for construction eligible for GO Zone bonus depreciation.  By eliminating the commencement date, Congress will allow the Gulf Coast to utilize the short-term assistance originally intended in the GO Zone Act of 2005, and acknowledge the impediments to rebuilding that are out of the direct control of the developers, builders, and contractors who are anxious to begin this much-needed work.

We appreciate your serious consideration of this matter and look forward to working with you in this regard.  Please do not hesitate to contact us directly or Erskine Wells of Senator Wicker’s staff, at x4-6253, should you have any questions or need additional information.

Sincerely,

[signed by]

Sen. Roger Wicker (Miss.)
Sen. Thad Cochran (Miss.)
Sen. David Vitter (La.)
Sen. Mary Landrieu (La.)

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