State Business Chamber Calls for Simplifying 'Local Chaos' of Industrial Tax Break Process

John Bel Edwards
John Bel Edwards / Getty Images
February 8, 2019

The statewide business chamber says Louisiana officials should consider requiring parishes to have a single policy governing industrial property tax exemptions and a single point of contact for companies who want to benefit from the incentive.

The Louisiana Association of Business and Industry also wants to give local governments the option of exempting project owners from 100 percent of local property taxes for the term of the agreement. The benefit currently is capped at 80 percent for most projects.

For decades, a state board granted exemptions from local property taxes without local input. Gov. John Bel Edwards through executive order gave local taxing entities a say in the process.

"I think incorporation of local input is a good development," LABI President and CEO Stephen Waguespack said while addressing the Baton Rouge Press Club on Monday. "Right now in Louisiana, unfortunately in some areas, we have local chaos instead of local input."

In Texas, he said, counties have a single entity that governs the equivalent incentive program. Counties lay out their criteria on their websites.

In Louisiana, companies must run through a "gauntlet" to get the benefit, Waguespack said. First, they get preliminary approval from the state Board of Commerce and Industry. The parish and municipal governments, school boards, and sheriff’s offices that otherwise would collect the property tax can choose not to grant their portion of the abatement, and the local entities can act independently of each other.

LABI is asking local governing authorities to streamline the decision-making process, establishing a single point of contact for companies if possible, and develop and publish clear criteria so companies understand the rules and the process. The organization wants the governor and the Board of Commerce and Industry to consider requiring a single point of contact for each parish and allowing the locals flexibility to offer abatements of up to 100 percent.

Edwards’ industrial tax exemption program (or ITEP) changes were controversial from the beginning, though the East Baton Rouge School Board’s recent decision to reject two applications from ExxonMobil has brought greater attention to the issue. Edwards has said he wouldn’t necessarily have made the same decision as the EBR school board but defended the democratic principle that local officials elected by local voters should decide what to do with local tax dollars.

Waguespack noted that the state constitution gives the governor broad authority over the program. Over the long term, he said, a constitutional amendment might be a better way to change the program but right now "calm and peace" and "stability" are the priorities.

It’s not too much to ask a company that wants a large portion of its tax bill waived to go to the local government and explain the project, the jobs it will create, and the capital that will be invested, Christina Stephens, a spokeswoman for the Edwards administration, said on Twitter.

"Answering questions and building consensus in a community where a generous tax exemption is being given should be part of the process," she said.

Published under: Taxes