Congress Passes $8B in Katrina Tax Breaks

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Congress passed nearly $8 billion in tax breaks for Gulf Coast businesses on Friday but denied federal help for casinos, liquor stores and golf courses.

Almost four months after Hurricane Katrina slammed into the coast, destroying businesses and jobs, lawmakers responded to President Bush's appeal for revitalizing the region with a special enterprise zone.

Both the House and Senate passed the bill by voice vote on Friday.

"It'll help to get our local government back on its feet, and it'll help to get our businesses incentivized to come back," said Rep. William Jefferson, D-La. "It'll make a huge contribution to restoring and rebuilding our city."

The tax breaks for business investment are aimed at luring companies into the region and keeping those that are already there. Companies can use a tax credit to defray salaries if they kept employees on the payroll even while shut down due to storm damage.

Numerous recreational businesses would be prohibited from using the special tax breaks. The list puts limitations on country clubs, casinos, hot tub facilities, liquor stores, massage parlors, golf courses, racetracks and tanning parlors.

A narrowly drawn exception, preventing taxpayer dollars from subsidizing gambling, means companies could consider their hotels and restaurants apart from attached casinos and take advantage of some of the tax breaks.

Sen. Trent Lott, a Mississippi Republican who pushed for casinos to share in the tax breaks like any other legal business, said he grudgingly swallowed the exception.

"It's totally bad policy. It's totally ridiculous. It's totally hypocritical," he said. "But this is almost $8 billion. We had to get it done."

Rep. Frank Wolf, R-Va., drove the effort to deny help to casinos, liquor stores and some other recreational businesses and eventually garnered support from more than 60 other conservative lawmakers in the House.

Other portions of the bill offer special tax-exempt bond authority to rebuild ruined infrastructure, tax breaks to rehabilitate buildings and expanded tax credits to build more low-income housing in the region.

Some tax cuts would help defray the cost of demolition and cleanup, including a special deduction for cleaning up petroleum products and urban areas with environmental contamination known as "brownfields."

Small timber operations and public utilities would get special aid. Students in Gulf Coast colleges and universities would see their education tax credits double.

Individuals hurt by hurricanes Rita and Wilma would get assistance already extended to victims of Hurricane Katrina. Those included expanded abilities to recoup casualty losses and withdraw retirement funds without penalty.

The bill also incorporates some other unfinished tax business. It would extend an expiring law that lets soldiers count their combat pay toward the earned income tax credit, a benefit designed to pull low-income workers out of poverty.