27 companies in Baton Rouge to get $55 million tax break through industrial exemption program, records show
As Gov. John Bel Edwards moves to rein in Louisiana’s generous Industrial Tax Exemption Program, a public records review by Daily Report found that 27 Baton Rouge companies were awarded the exemption last year, accounting for about $55 million in tax breaks over the coming decade on 71 projects.
The program allows businesses to obtain a 100% exemption on local property taxes for two five-year periods on new purchases of buildings and equipment.
Last year, Louisiana approved 769 projects throughout the state for the program. Over the next decade, the exemptions statewide will total more than $3.3 billion—money local governments would otherwise collect.
The projects receiving the exemption account for approximately $20 billion in spending by the companies behind them.
While the program is often touted as a job creator, Louisiana Economic Development records show projects awarded the exemption last year are expected to create just 3,086 new jobs across the state.
The projects in Baton Rouge are expected to create 70 jobs locally, LED data shows. However, Don Pierson, LED Secretary, says the 2015 job creation figures may be underreported since the data was not a requirement of the program before Edwards issued an executive order this year that, among other things, requires companies to verify job creation and retention figures to justify the exemptions.
“Maybe there were no jobs, maybe there were and the company just didn’t report them,” Pierson says.
Shabaka Gibson, a spokesperson for ExxonMobil—which received exemptions on five projects in Baton Rouge last year—says the company’s projects will create thousands of temporary construction and contracting jobs over the life of the exemptions.
Before Edwards’ order, which also directs LED to enter into cooperative endeavor agreements with businesses to ensure the projects earning the tax break either retain current jobs or create new ones, there were few strings attached to receiving the exemption.
In an effort to stabilize local governments and give parishes a “seat at the table” when approving the exemptions, Edwards’ executive order calls for local governments to be involved in discussions about the exemption approvals. Pierson says he doesn’t expect many municipalities to deny exemptions going forward.
Business groups—including the Louisiana Association of Business and Industry—oppose Edwards’ move, with LABI President Stephen Waguespack saying it amounts to “gutting one of the most important economic development tools we have here.”
Oil and gas companies, already reeling from the slide in oil prices, are worried about what the changes will mean for them, says Camille Ivy-O’Donnell, Louisiana Oil and Gas Association director of communications and governmental affairs.
“It has potential to stunt economic growth in the state,” she says. “We can’t afford to lose more industry.”
While lawmakers have recently taken aim at the Industrial Tax Exemption Program, citing its lack of permanent job creation and toll on local government revenue streams, Rep. Barry Ivey, R-Baton Rouge, warns against “knee-jerk” reactions to incentives for business.
Ivey says the Industrial Tax Exemption Program also benefits the construction industry, and temporary jobs should not be dismissed as a benefit of the program.
“While it may be prudent to take a close look at the program, we may have gone too far too fast and inadvertently hurt business more than intended,” he says. “If we had better tax policy we wouldn’t have to have these incentives.”
Explore all of the projects approved for the exemption in Baton Rouge last year in the interactive map below: