A request by ExxonMobil for a property tax break worth an estimated $23 million over the next decade won easy approval Thursday from the East Baton Rouge Parish School Board.
The company said the tax break would help it modernize its oil refinery in Baton Rouge, a major project will bring a big economic boost during construction. And it said the decision will pay off over time with higher property tax payments once the 10-year incentive ends.
The final vote was 8-0; board member Dawn Collins was absent.
Afterwards, in a statement, ExxonMobil said the vote was "a great step in the right direction towards final approval of the project."
It was quite the turnabout from January 2019, when the board shocked the company by rejecting a different tax break request.
Dadrius Lanus, who was brand new to the board, voted against that Exxon tax break request but said he’s “110%” in support of the new request. He complimented Exxon for working hard since to forge better relations with him and other board members in the years since: “The relationship wasn’t as strong as it is now.”
A state board unanimously approved economic incentives Friday for ExxonMobil’s proposed $410 million Baton Rouge refinery modernization and fo…
Late last month, the request was approved unanimously by the state Board of Commerce and Industry, which oversees the state’s Industrial Tax Exemption Program, known as ITEP. Gov. John Bel Edwards and Mayor Sharon Weston Broome also have come out in favor of it.
After the vote Thursday by the School Board, Sheriff Sid Gautreaux announced that he'd already approved earlier this month Exxon’s ITEP request. Next Wednesday, the Metro Council is expected to do the same.
Those local approvals, which company officials say are crucial, would clear the way for a final vote in March by the company on whether to go forward.
“There’s got to be a reason to want to put it in Baton Rouge,” said Gloria Moncada, a vice president with Exxon, who until recently was manager of the refinery. “There has to be an incentive."
Moncada said the company has rejected two earlier versions of this proposal and this is its last chance. She also noted that along the way it's been pared down a lot.
Only $230.5 million of the $410 million project is eligible for under the state's tax exemption program, which would provide an 80% property tax abatement worth $23.2 million to the company over 10 years — earlier estimates suggested it was a high as $27 million. The project will support more than 2,000 construction jobs, but is not expected to create any new permanent jobs, which also has drawn criticism.
Moncada emphasized that the project will protect existing jobs by making the refinery more competitive, allowing it to process crude it can’t currently process from places like Canada and the Permian Basin. She cited the recent closure of Shell's plant in Convent as a cautionary tale: "Who would have thought that would happen? We have to keep ourselves competitive in this industry.”
School Board member Mike Gaudet made a similar point. Gaudet, a retired Albemarle executive, noted that the drop in importation of oil to the United States has made Louisiana refineries less competitive.
“The economics of getting crude to the refineries in Louisiana has really changed,” Gaudet said. “What was an advantage to us has become a disadvantage.”
Opposition to the latest Exxon request was muted compared to two years ago. Opponents have suggested the new project might be closer to maintenance than a new project and objected that it won’t create new permanent jobs and might have adverse environmental impacts.
The East Baton Rouge Parish School Board on Thursday voted just before midnight Thursday to reject two controversial requests for industrial t…
Together Baton Rouge, a faith-based group, led the charge in 2019 but this time put out a statement Thursday before the meeting that did not come out squarely against the proposal. In its statement, the group noted that Exxon landed hundreds of tax exemptions in years past that deprived schools and other public services of hundreds of millions of dollars of needed money.
“The big question is whether our elected officials will allow this exemption to signal a return to the ugly history of using ITEP as a regular source for corporate welfare instead of as an incentive that creates jobs,” according to the statement.
Both of the local teacher unions urged the board on Thursday to say no, as they have done for previous ITEP requests.
"We do not have enough money coming into this system yet you want to hand away more?" said Kirk Green, a leader of the parish's Federation of Teachers.
"No money that is allocated to students should be given away,” said Valencia Johnson, president of the parish’s Association of Educators.
Exxon argues that the 10-year loss in property taxes will be more than outweighed by an estimated $500 million in new spending overall prompted by the refinery modernization and the construction jobs it will generate, starting later this year. And they said that, measured over a 40-year period, the proposal will generate $48 million in local sales and property taxes.
And some of the overall investment includes new environmental processing technology at the ExxonMobil refinery that will reduce its volatile organic compound emissions by about 10%, according to its ITEP application.