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A wood chip truck heads to Georgia-Pacific's Port Hudson paper mill Thursday. The company will lay off nearly 700 people as it shuts down office paper operations at the mill due to declining demand. About 300 people will continue to work at the mill, producing toilet tissue and paper towels for retail purchase.

Georgia-Pacific said Friday it is dropping its request for a $2 million property tax break that promised 30 new jobs, a day after the firm announced it will lay off nearly 700 workers, mostly at a Baton Rouge-area paper mill.

“This morning we’re requesting to the Commerce and Industry board to not move forward with our ITEP project because we clearly won’t meet the job requirement component of it,” said Georgia-Pacific spokesman Kelly Ferguson.

Local officials voted in the past month to approve the Industrial Tax Exemption application for a $42 million expansion of Georgia-Pacific’s facilities. The tax break would have been worth $2 million to the company over five years.

The Industrial Tax Exemption Program, or ITEP, is a controversial incentive that gives manufacturers in Louisiana a break on their property taxes. Local officials have the ability to vote on the exemptions because of a 2016 executive order by Gov. John Bel Edwards.

The company was seeking the tax break as recently as December, when the Zachary School Board and East Baton Rouge Metro Council approved the exemption. The Metro Council deleted the item from its agenda, which had the effective of approving it. East Baton Rouge Sheriff Sid Gautreaux also approved it.

The company also won approval from the state Board of Commerce and Industry in October. The ITEP request was awaiting the governor's signature. 

The property taxes Georgia-Pacific does pay are a significant contributor to the Zachary School Board, said Scott Devillier, Zachary Schools Superintendent. 

"As we move forward we’re going to be very cautious with asking them to share information with us to see if our property taxes are going down, could you give us a heads up?" Devillier said. 

Whether the company applies for future ITEP incentives depends on whether it makes investments to the tissue and paper towel division of the plant, which will remain open and employ around 300, Ferguson said.

The company announced Thursday that it was closing the major division of its Port Hudson plant that produces office paper, as the Atlanta-based firm leaves the communication business. It will lay off 650 at the mill in March, and another 40 or so business and sales employees mainly based in Atlanta.

Georgia-Pacific has benefited from several tax incentives in Louisiana over the years, mostly at the Port Hudson plant, Louisiana Economic Development records show. 

In 2018, the firm was exempted from paying nearly $9 million in property taxes, according to the tax roll prepared by the assessor. In 2010, it struck an economic development deal with former Gov. Bobby Jindal that gave it $3 million in tax credits, $300 million in Gulf Opportunity Zone bonds and ITEP incentives. 

Ferguson said Thursday the company decided around a month ago to shut down the office paper division and lay off the workers.

Follow Sam Karlin on Twitter, @samkarlin.