After more than a year of deliberation, the East Baton Rouge Parish School Board is preparing to adopt guidelines for handling requests for industrial tax exemptions that largely track the ones adopted last month by the Metro Council.
However, a faith-based group critical of these tax breaks, Together Baton Rouge, on Wednesday attacked what they described as "several, subtle changes" to what the Metro Council settled on, saying that they serve to "gut the measure entirely and transform it into a rubber stamp."
The parish school system’s proposed guidelines preserve the most contested part of the Metro Council’s guidelines, namely that projects need to create at least 15 permanent, full-time jobs. But, unlike the Metro Council's version, the School Board would exempt any "environmental project" which provides benefits above and beyond what's required by law from the job requirement.
In an email to its members, urging them to come out in force against the new guidelines, Together Baton Rouge blasted that added language as a "massive loophole."
"'Environmental projects' is defined so broadly that virtually every application would qualify," according to the email. "That means that every project would qualify, without having to create a single job."
The debate over what guidelines the East Baton Rouge Parish Metro Council will use on future industrial tax break requests was settled Wednesday.
The School Board is set to consider its own guidelines for ITEP — short for Industrial Tax Exemption Program — when it meets at 5 p.m. Thursday at the School Board Office, 1050 S. Foster Drive. It’s not slated to give final approval to the guidelines until its Dec. 13 meeting.
The guidelines are the culmination of years of fights over how best to remake Louisiana’s decade’s old ITEP program, which gives manufacturers that plan to spend money on expansions or improvements a break on their property taxes.
Under new state rules that took effect on Aug. 20, approved projects receive an 80 percent property tax abatement — down from 100 percent previously — over 10 years, instead of eight.
But, in a big change from the past, local taxing authorities now have an opportunity to say “yea” or “nay” to the portion of the tax breaks that applies to them. In East Baton Rouge Parish, that includes the School Board as well as the Metro Council and Sheriff's Office.
The changes have sparked intense public and behind-the-scenes debate, pitting business groups favoring fewer restrictions against community activists and school employee organizations that want more limits on when exemptions are granted.
School Board members Dawn Collins and Mike Gaudet are slated to present the proposed ITEP guidelines to the board Thursday night. Collins has echoed many of criticisms of ITEP while Gaudet has generally sided with the ITEP proponents, such as the Baton Rouge Area Chamber.
ExxonMobil, which has received many ITEP exemptions through the years, argues that ITEP helps maintain a business environment that promotes capital investment and job creation.
"For this reason, it is imperative that we have a predictable, stable tax climate going forward as this is a key consideration for future ExxonMobil investment — and likely for other businesses, as well," ExxonMobil spokeswoman Megan Manchester said. "We appreciate the work of the Metro Council and the East Baton Rouge Parish School Board to develop these guidelines and help move the dial in the direction of predictability."
In its Wednesday email, Together Baton Rouge raised several objections. It criticized new language saying that the new guidelines would apply only to ITEP exemption requests begun after Aug. 20. The organization wants the new guidelines to apply to a handful of already completed projects that are in the pipeline but have yet to receive ITEP exemption, including a handful from ExxonMobil. The organization wants to use the added tax revenue from denying these ITEP requests to increase the salaries of school employee as well as for other educational purposes.
In one departure from the Metro Council’s guidelines, the School Board plans to bring on the chamber to work with its finance department to come up with the forms ITEP applicants will have to submit to establish “clear baselines and projections for the outcomes.” The Metro Council plans to rely solely on the city-parish's finance department to handle these duties.
Liz Smith, senior vice president for economic competitiveness with the business organization, said BRAC is willing to help in whatever way the School Board needs. She said it has no plans to charge for this particular service since it's the kind of work the business group does every day.
Together Baton Rouge, in its email, objected to the chamber's involvement, saying that it "funded by the applicant companies" and "lobbies openly for approving ITEPs."