While it is a complex subject, there is one profound observation about Louisiana's lavish property tax break for big business: "When you give away other people's money, you get really good at it."
That quote is from Broderick Bagert, organizer of the Together Louisiana coalition of religious congregations that have challenged the almost-century-long practice of big tax breaks for industry in Louisiana. He refers not just to taxpayers' money but the power that Louisiana's state government has over cities and parishes.
The state has for 80 years allowed up to 10 years of property tax exemptions for manufacturing. But the property taxes aren't the state's money, except for very small portions that go to levee boards or other purposes; the bulk of property taxes are paid to local government, so they are the ones hurting when there is not enough revenue for better schools, roads or other purposes.
The state got so proficient at giving away others' money that the program, formally the Industrial Tax Exemption Program, or ITEP, became an entitlement rivaling those legends of welfare queens in Cadillacs. Companies got major tax breaks, apparently way out of line with what's done in other states, from a state board that rubber-stamped the companies' flimsy documentation. Locals just had to eat the losses.
Even Cameron Parish, profiled in an Advocate series on the ITEP breaks, has been cut out of many local tax revenues because of state exemptions on multi-billion-dollar plants to export liquified natural gas. No one can rationally defend the way the ITEP program was administered for decades. Changing it, though, is hard. Through an executive order issued by Gov. John Bel Edwards in 2016, the authority for granting the tax breaks shifted, in large part, to city councils and school boards unused to their new powers. Companies did not like the confusion, and we don't blame them. By and large, though, most of the exemption requests that are now trickling up to school boards and others are approved. Few politicians want to be accused, however falsely, of chasing off new jobs.
There's another bigger debate about whether tax breaks really matter. As the conservative-leaning Tax Foundation noted, ports and petrochemical manufacturing — where most of this tax revenue has gone — would have come to the mouth of the Mississippi River, or the Sabine for liquefied natural gas ports, anyway. Would the tiny portion of a project that would go to local tax revenues really matter?
We don't have a good answer to that question. Certainly, though, these are high-paying jobs, and even taxes on depreciated equipment create very large property tax revenue to local governments over time — not to mention proceeds from taxes on sales and other payments.
What has really changed? Edwards' order shifted some power away from the state to cities and parishes, where in the rest of the nation decisions about property taxes rest. That's appropriate. The Bagert quote is all too relevant to our situation.
Elected officials need to sort out the relationships between a powerful state government, often paying local bills in ways that other states don't, and a local government that does not have the property tax revenues that cities and parishes in other states usually get. Bad roads, underfunded schools, dismal public services -- those conditions aren't good for business, either.