Change is messy.
This, it seems to me, is what lies beneath the ongoing war of words over Louisiana’s 80-year-old Industrial Tax Exemption Program.
Gov. John Bel Edwards put ITEP under scrutiny as part of an overdue revisitation of the state’s convoluted taxing system. It is therefore, almost by definition, all caught up in election-year politics, and one of Edwards’ Republican challengers, Baton Rouge businessman Eddie Rispone, is sounding some very loud alarms. So is the powerful Louisiana Association of Business and Industry.
But Edwards’ initiative, launched in 2016 and revised with input from affected parties in 2018, has much to recommend it.
Previously, companies could receive a 100 percent exemption on local property taxes for up to 10 years for specific projects. Now the max is down to 80 percent. Also under the new procedures, local taxing authorities can reject an application, as the East Baton Rouge School Board did recently when ExxonMobil, the parish’s biggest taxpayer but also the recipient of generous breaks in the past, sought two exemptions.
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, the community organization that’s been pushing for change, hailed the school board’s decision as a victory for grassroots democracy and a way to help fund badly needed education priorities. LABI cranked up the rhetoric as well. The group’s president, Stephen Waguespack, called the program broken and warned that uncertainty could ward off future investment.
Yes, it might, although it's not as if Louisiana doesn't have plenty else to offer manufacturers, from natural resources to port access to a friendly regulatory structure.
On the other hand, there are strong arguments for reconsidering a system developed in an era in which industrial expansion was synonymous with jobs. Now, it’s just as likely to lead to job-reducing automation, which is one good reason to take another look at the program.
The strongest argument for change, of course, is that the affected jurisdictions should have a say in whether they must give up tax revenue that could fund local services. Such local control is a bedrock conservative principle — in theory, anyway, even if it runs up against the interests of big business.
The demands in given communities may vary because leaders decide they have different needs. In New Orleans, for example, the City Council recently approved new rules requiring any companies seeking relief through the program to pay at least $18 an hour, be located in economically struggling neighborhoods and not have started construction before requesting the tax break.
"I stand with those who are tired of New Orleans not getting its fair share," the measure’s sponsor, Councilwoman Helena Moreno, said.
Might companies avoid Orleans and look at less demanding neighboring parishes? Could be, and local officials will have to live with the consequences of someone else scoring a big economic development deal at their expense. And perhaps, if that happens, the council will sing a different tune.
Over the past 20 years, Exxon Mobil has been exempted from paying almost $700 million in property taxes that would have otherwise helped pay f…
That’s the thing about changing major, deeply ingrained policies.
There will be trial and error. There will be unintended consequences. There will be deep philosophical debates over the value of these business investments versus the value of what local government must forego to get them. There will be winners and losers.
If officials are smart, there will be adjustments along the way. There already have been.
And eventually, there will be a new form of predictability. In the future, companies can bank on paying at least 20 percent from the beginning, and on having to appeal to local authorities, not just the Louisiana Board of Commerce and Industry. That’s something they can surely work into their planning processes.
Getting there won’t be fun, or easy.
But simply avoiding the journey because it’s too disruptive is a sorry excuse to stick with the status quo.
With an eye toward easing the tax burden on New Orleanians who live in neighborhoods where recent renovations have sharply pushed up the value…