After facing months of opposition from organizers that included a walkout threat from local teachers, ExxonMobil dropped two applications for property tax exemptions Friday but went forward with three others that will save it $6.6 million.
The company dropped a request for tax breaks on additions made to its chemical and plastics plants in Baton Rouge.
Instead, it moved forward with requests for property tax exemptions on $71.3 million worth of investments made in 2017 to its refinery, polyolefins plant and Port Allen lubricants plant, and won approval from the state Board of Commerce and Industry Friday. If approved by local officials in Baton Rouge, the exemptions will cost $6.6 million in local property taxes over 10 years, the company said. Exxon estimates the projects will create $23 million in property and sales tax revenues, as the exemptions are for 80 percent of the total project costs.
Exxon said the decision to drop two of its applications had nothing to do with pressure from opponents. Instead, the decision was based on the latest cooperative endeavor agreement requirements issued by Louisiana Economic Development this month, 10-year headcount estimates and potential future investment opportunities at the sites.
The company’s tax exemptions in Baton Rouge, through the Industrial Tax Exemption Program, have become central to a fiery debate over corporate tax breaks, teacher pay and economic development in the region.
A long line of residents, teachers and organizers with the advocacy group Together Baton Rouge spoke out Friday against awarding Exxon the tax breaks. The opponents argued residents and non-industrial businesses are picking up the tab through higher property tax bills because of the exemptions. And educators lamented a lack of public school funding that they say could be helped by rejecting ITEP applications.
“All these businesses and industries are complaining about not having an educated workforce,” said resident Katherine Grigsby. “If you want an educated workforce, you’ve go to pay for that.”
“We need business and industry to pay their fair share to our children,” added Tia Mills, president of the East Baton Rouge Parish Association of Educators.
Together Baton Rouge also has argued the government should not incentivize the projects because they have already been completed.
But the Board of Commerce and Industry, which has historically approved the exemptions, sided with ExxonMobil, voting without objection to pass the three tax breaks. Representatives from business and industry groups, including the Baton Rouge Area Chamber, Louisiana Mid-Continent Oil and Gas Association and Greater Baton Rouge Industry Alliance, spoke in favor of awarding the tax breaks.
The exemptions, because of reforms put in place by Gov. John Bel Edwards, now go to local officials in East Baton Rouge Parish for a vote. Previously, the state board decided whether to approve or reject local property tax exemptions. Instead of 100 percent exemptions over 10 years, the abatements will be for 80 percent.
Exxon described the exemptions as necessary for Baton Rouge-area facilities to stay competitive with other Exxon sites throughout the world, especially in neighboring Texas. The company already won approval for a separate tax exemption on a more than $500 million expansion to its polyolefins plant, and will likely make a final investment decision on that project soon.
Gloria Moncada, manager of the ExxonMobil Baton Rouge refinery, said the company decided to drop its two applications for tax breaks at its chemical and plastics plants after company officials decided they were not sure about maintaining jobs numbers associated with the projects. That’s because the company is “sending employees to Texas for projects that are being built there because it’s more attractive.”
“(Exemptions) absolutely make a difference at ExxonMobil,” Moncada said. “I’ve been involved in watching corporately decisions being made to send multibillion-dollar projects to Beaumont,” Texas.
The projects for which Exxon is seeking exemptions include a $64 million, 18-job refinery investment and a $4.3 million, nine-job investment in the Port Allen lubricants plant.
The company also is asking for an exemption for a $3 million investment at its polyolefins plant that created zero new jobs. Exxon spokeswoman Megan Manchester said that project will retain 244 workers currently at the plant.
Reforms of ITEP have prioritized job creation, but locals still have the ability to approve tax breaks for projects that don’t create new jobs.
The projects were completed in 2017, but the company said it waited to bring the exemption requests until the new rules were crafted.
The Industrial Tax Exemption Program has been around for decades, but Edwards’ reforms in 2016 gave local officials a say in whether to approve them. An Advocate series last year found companies were able to cut jobs while receiving tax benefits from ITEP for years.
Many of the community organizers and educators at Friday’s meeting also have rallied at local school board meetings in recent months, imploring board members to scrutinize ITEP requests. That effort is closely tied to efforts to raise teacher and school employee pay throughout the parish, the first across-the-board pay raise in a decade.
East Baton Rouge Schools Superintendent Warren Drake has said he is looking for ways to cut $30 million to $40 million in future spending. The school system estimates ITEP exemptions cost it $16.9 million in property tax revenue.
Educators also filed suit against East Baton Rouge Assessor Brian Wilson, arguing he should have put the property additions for which Exxon is seeking exemptions on the tax rolls this year. Wilson left them off the rolls and said he would add them back if the ITEPs were rejected.
State Sen. Norby Chabert, a Houma Republican who sits on the Board of Commerce and Industry, was one of the most vocal proponents of the tax breaks Friday.
“Quite often we pick a target like the largest corporation in the world and say ‘You’re the bad guy,’” Chabert said. “I just think we need to take a more holistic view of this and not discourage investment in Baton Rouge.”
Exxon spokeswoman Stephanie Cargile said Exon currently pays $32 million annually in property taxes locally.
“Our company, you cannot take it for granted that we’re going to invest in Baton Rouge,” she said. “That’s misinformation. We’re a global company.”