Who is the single largest taxpayer in East Baton Rouge Parish? It’s not a trick question, but an insight into what’s important in an overheated and unfortunate debate about tax breaks and economic development.
The answer, as recent headlines might suggest, is ExxonMobil, the oil and chemical giant which has been a valued part of Baton Rouge and Louisiana for more than a century. But all is not well in what should be a mutually supportive relationship.
The company is angry that Baton Rouge’s school board has turned down tax breaks for two projects. It is withdrawing similar applications for tax relief from other local governments — adding $6.4 million over 10 years to ExxonMobil’s tax bill, something the company didn’t anticipate.
That kind of unpredictability isn’t good for business, and the board’s 5-4 vote has provoked a bitter dispute between business groups on one side and community activists and teacher unions on the other.
This debate should be watched all over the state, as a once-automatic industrial tax break — far and away the largest such incentive in the country — is now working through a change kicked off by Gov. John Bel Edwards in 2016. He decreed that the breaks, which rob local governments by state action, should be signed off by local governments.
That makes sense, but for the first time, local governments have taken out on a few companies long-standing resentments against the tax breaks. Smaller ones have been turned down in Shreveport and New Orleans; much bigger ones have been approved, indeed almost waved through, in major industrial parishes like Ascension and St. James. One application for ExxonMobil across the river from Baton Rouge was locally approved.
For the breaks to be denied to the central facilities of an iconic company with a long-term commitment to the region is dramatic and ought to cause some consideration of whether the school board has gone too far. As the governor notes, though, similar tax breaks in Texas have to be approved by local governments too. "The system for getting an ITEP is very similar to that in Texas," Edwards told reporters and editors meeting with him at The Advocate.
As ExxonMobil representatives have pointedly noted many times, the company is expanding in the Gulf South. More investments are possible for Baton Rouge and we endorse them, as does the governor and local leadership. Breaks under the Edwards rules will provide, in contrast to the old days, 20 percent of property tax revenues to local government right away, without waiting 10 years.
We need some appreciation from grass roots groups of the pragmatic reality that Texas or other states will also offer big tax breaks. Also, economic expansion will be pulled toward parishes that are more receptive to the tax breaks.
Maybe it's not a perfect system, but it is the one that we live in.