A political fight over industrial tax breaks in Baton Rouge drew national attention in The New York Times, but for Louisiana, the questions about local decisions on the exemptions require more thought.
If the few million for tax breaks in dispute — rejected 5-4 by the East Baton Rouge School Board — are “small change,” as the Times story said, there remain much bigger requests for exemptions further down the road.
A story splashed in the business section of a major national newspaper does affect perceptions of our state and anti-incentive activists use it in their fundraising.
The good news is that the Times story reiterates what we believe to be the case, that we are “business-friendly Louisiana.” Louisiana is offering a huge amount of industrial tax breaks, far more than most states; the cause of that is a boom in industrial construction, from petrochemical manufacturing along the Mississippi River to giant export plants for liquefied natural gas on the Gulf of Mexico.
We want to continue to be business-friendly Louisiana.
Our friends in Texas, a key competitor for petrochemical manufacturing, will use tax breaks there to woo big plants. We must be competitive, but Louisiana’s tax system — a hot mess, if you want to use the technical term — is largely antibusiness in many ways, as outlined recently in a report from the Louisiana Association of Business and Industry.
That is because not only business breaks — the industrial tax exemption is for property taxes — but also because the homestead exemption cuts tax bills for homeowners and thus shifts burdens to commercial properties. Other taxes are onerous, too. And despite pleas in the last few years, the drastic rewrite of Louisiana’s tax code that is needed has gone nowhere in the Republican-controlled Legislature.
Today’s issue, though, is about the industrial exemption: That big tax-break program is in a period of transition, one that was kicked off by a reasonable decision of Gov. John Bel Edwards to give local authorities a say in the break, long decreed by the state but taking property taxes from the pockets of school boards, cities and sheriffs, among others.
At the Press Club of Baton Rouge, LABI President Stephen Waguespack said his group is not opposed to local decisions. But he called the plethora of local agencies a “gauntlet” for business. He suggested that the ITEP rules, originally issued in 2016 and revised by Edwards last year, be changed again to provide — as Texas law does — a “single point of contact” for those seeking exemptions.
That may not sit well with the prickly independence of local elected officials, who want to make their own decisions, but if research by state officials backs up Waguespack’s arguments, maybe we should consider a third revision to achieve a smoother system.
Meeting with editors and reporters of The Advocate recently, Edwards said he is open to more changes if they retain local control of decisions and do not give breaks for things companies are required to do anyway, such as installing new pollution control equipment.
Government and business should be able to work something out, without making Louisiana business-unfriendly.