A bid to enshrine changes Gov. John Bel Edwards made to curtail the state’s most generous tax incentive for industry into the state constitution is still alive, after a lengthy debate that pitted a host of local government officials against some of the state’s most powerful business lobbies.
In a committee hearing Monday, sheriffs, parish presidents and school board leaders asked lawmakers to keep Edwards’ 2016 overhaul, which gave local governments a cut of the tax revenue from new industrial projects, as well as the ability to reject applications for tax exemptions. That power may be in jeopardy, with a Republican widely expected to take the Democratic governor’s place when Edwards is termed out in 2024. The rules of the state’s Industrial Tax Exemption Program could be scrapped by a new administration; the Board of Commerce and Industry that oversees it is controlled by the governor.
Sen. Rogers Pope, a longtime Livingston Parish school system official, argued that local officials should have a say in deciding whether to exempt companies from the property taxes that fund their roads, schools and other services.
“In my opinion it’s not very controversial,” Pope, a Republican, said of SB 151. “Fundamentally, I think it’s a real simple issue. It’s about protecting the authority local governments have on giving away their local property tax dollars to business and industry.”
After hearing from several local elected officials supporting the bill, as well as business and industry lobbyists opposing it, the Senate Revenue & Fiscal Affairs Committee opted to send the bill to the full Senate without objection. The move made it difficult to determine how much support the bill had, because some members who clearly didn’t like the bill let it pass without voting against it. The real fight will likely take place on the Senate floor, where Pope and the groups supporting the bill must garner a two-thirds vote, a high hurdle in a Legislature that often sides with business groups. It would also need a two-thirds vote of the House, as well as a vote of the public, to become law.
The legislation has set up interesting political factions. Business groups, especially those representing oil and gas, hold considerable sway in the conservative Legislature. But sheriffs, parish presidents and other local leaders are also influential, and those officials showed up in force Monday.
The Louisiana Association of Business and Industry, Louisiana Chemical Association and several oil and gas companies oppose the proposal, for many of the same reasons they opposed Edwards’ changes. They argue the new system is too complicated for businesses, which now have to get their exemptions approved by three different taxing authorities, usually the sheriff, school board and council. Before the changes, they only had to get approval from the Board of Commerce and Industry, which granted almost every single application.
A 2017 Advocate investigation found the board granted billions in tax breaks, even to companies that were cutting jobs.
Jim Patterson, of LABI, called the bill “highly inadvisable,” saying it hamstrings the “agility” of the state as it looks to attract businesses. He said the Legislature shouldn’t “tie the hands” of future governors by making Edwards’ changes permanent.
“This is necessarily a program that is intended to make us competitive with other states that are looking for the same manufacturers as we are,” he said.
But local officials from some of the parishes that use ITEP the most – largely along the Mississippi River, where dozens of capital-intensive chemical plants and refineries have set up shop – say the changes have given them a much-needed seat at the table.
State data suggests local officials have used their new power sparingly. Since 2018, when the latest iteration of Edwards’ changes went into effect, local governments have approved about 84% of ITEP requests. But the tweaks to the program have brought more money into local coffers – partly because, even when the breaks are approved, they are not as broad under Edwards’ changes. Together Louisiana, which fought for the original overhaul and is pushing Pope’s bill, estimates property tax revenue statewide increased by at least $262 million from 2016 to 2021.
“We didn’t get anything before,” said West Baton Rouge Parish President Riley “Peewee” Berthelot, a Democrat. “We didn’t have a voice. Now we get to see some of the money.”
Stephanie Riegel, a former business journalist who is pushing the bill for Together Louisiana, said companies looking at places to build plants are more interested in quality-of-life measures and a well-trained workforce – things that are funded with local property tax dollars. Officials from both parties in St. James, St. John the Baptist, Iberville, St. Charles and others in the industrial corridor testified in support.
Edwards’ changes let locals decide whether to grant an 80% exemption for two five-year periods. The exemption had been 100% under the old rules. The new rules also bar companies from getting exemptions for things like routine maintenance and required environmental upgrades.
Michael Olivier, head of the Committee for 100, an economic development group, said he discussed rolling back ITEP with Gov. Kathleen Blanco when he served as her secretary of economic development, because it was so generous. He said he supports the fact that locals have a seat at the table, and doesn’t think the 20% companies now have to pay makes a big difference. But he argued locals should have a single point of contact for businesses looking to get approval for their tax breaks.
