The bottom is falling out from under Louisiana’s construction industry. In the past year and a half, we’ve lost a staggering 14,000 construction jobs, according to a new report by the U.S. Bureau of Labor Statistics. Only one state lost more construction jobs than Louisiana in the past year. Two-thirds of them, 34 in all, others saw an increase. Our business-friendly neighbor, Texas, gained 55,900 construction jobs last year. Companies are clearly choosing states other than Louisiana to invest their capital.
“These large multinational companies that are making these investment decisions, everyone knows they don’t like uncertainty, so they are in a holding pattern or deciding to invest in Texas where they are rolling out the red carpet,” said David Helveston, president and CEO of the Pelican chapter of the Associated Builders and Contractors.
That dreaded uncertainty Helveston speaks of exploded on the scene when Gov. John Bel Edwards, with a stroke of his pen signed an executive order gutting the state’s Industrial Tax Exemption Program or ITEP. Four years ago, Edwards, a Democrat, added layer upon layer of uncertainty to the crucial incentive by giving local governments the kill switch on the program.
“The before and after number of projects, it’s just shocking the pipeline of projects before the executive order versus the number of projects after the executive order,” said Helveston. “My member companies are spending time in Houston, Corpus (Christi) and Beaumont more so than Louisiana right now.”
The anti-development and left-leaning group Together Louisiana played a big role in getting out the vote for Edwards during his first run for governor. The nonprofit lobbied Edwards hard for the changes to ITEP when he first took office. Mission accomplished. 14,000 construction jobs that were, are no more.
Edwards’ executive order changing ITEP meant local school boards or police juries with members having little or no business experience now had the power to block multimillion-dollar projects. The potential roadblocks local governments created caused the state’s business climate to be flush with uncertainty and unpredictability.
“Just tell me the rules, tell me the formula. It doesn’t really matter, but it has to be predictable,” ExxonMobil’s Americas regional manufacturing manager, Charles Dabadie told the audience at a recent Baton Rouge business conference hosted by the South Central chapter of the Construction Financial Management Association.
Louisiana has long been known for a tax structure described by many in the business community as a convoluted mess and punitive. The ITEP incentive was designed to offset the challenges of our anti-business tax code. But when Edwards gutted it four years ago, he made Louisiana a lot less attractive for investment.
“Now every parish in Louisiana can come up with their own methods because they don’t know how to administer this,” said Charles Kelley of Cornerstone Chemical in Waggaman. “For years, we’ve had a very predictable and stable process that was competitive with nearby states. Today, it is definitely less competitive. We’re losing out on some opportunities here.”
It’s not just the construction industry feeling the pain. The Bureau of Labor Statistics recently reported Louisiana’s unemployment rate rose in December to 4.9%, the fourth highest in the nation. Louisiana and Pennsylvania had the highest month-to-month increase in unemployment in the country last month.
Losing 14,000 construction jobs in the past year and a half should make fixing and restoring the ITEP incentive priority one. There are currently 36,000 fewer people working in Louisiana than when Edwards first took office in January of 2016, according to the U.S. Bureau of Labor Statistics. Louisiana’s unemployment rate has dropped in the past four years but only because 80,000 have left the state for greener pastures since Edwards became governor.
Edwards, not famous for admitting mistakes, may have finally figured out gutting the ITEP incentive four years ago was a really bad idea. The governor is now considering “tinkering” with the program to make it easier for companies to win tax breaks. Let’s hope so. It’s time for Edwards to end his war on Louisiana’s private sector.
Email Dan Fagan at firstname.lastname@example.org.