The ITEP Committee for East Baton Rouge Parish is meeting this morning to decide on the “formula” for handling property tax exemption requests related to business, industrial and manufacturing projects.
After weeks of debate—largely between the Baton Rouge Area Chamber and Together Baton Rouge—the committee is expected today to vote on a proposal being billed as a compromise solution. The goal: a parishwide matrix to evaluate applications for the Industrial Tax Exemption Program.
It’s imperative for Baton Rouge officials to get this right. This program is a critically important part of our economic development toolbox. Several major projects for Baton Rouge seem to be in a holding pattern awaiting the outcome of this debate.
Prior to Gov. John Bel Edwards changing the ITEP program—by giving local taxing authorities control over the waiving of local property taxes—Louisiana offered the lowest combined state and local tax burden in the country for new, capital-intensive manufacturing projects. This includes the construction and expansion of chemical plants and oil refineries.
How important is ITEP? Remove it from the equation and Louisiana would be the highest tax state in the South—and 7th-highest in the nation—for new chemical plant and oil refinery projects. Granted, no one is talking about eliminating the program but there are many out there calling for its use to be severely restricted.
I’m told that when the national tax rankings published by the Tax Foundation and KPMG are updated, Louisiana’s standing will fall in all the business climate rankings tied to the corporate tax rankings, such as those published by Forbes, CNBC and Site Selection magazine. Given everything else this state must overcome, any significant hit on our tax rate is almost certain to negatively impact our chances to land future job-creating projects.
The calls for a far more restricted ITEP are being led by Together Baton Rouge—but our community is hardly “together” on its approach. In my view, this left-leaning organization first blew it with their support of the CATS tax which is still a mess. Political consultant Clay Young said TBR has “taken the place of the unions and they have a lot of influence and power.” I think the “union” label fits based on their style of bullying tactics.
This much is certain: TBR doesn’t represent the views of this lifelong resident of Baton Rouge.
Broderick Bagert, lead organizer for TBR, said this last July while speaking against some tax exemptions to the Baton Rouge school board, “No one needs to give you an incentive to wake up in the morning. You’re going to wake up in the morning anyway. If they give you money to wake up in the morning, that’s a gift.” What he fails to mention is these companies ultimately have a choice of what parish or state they wake up in.
Neighboring parishes like West Baton Rouge, West Feliciana and Ascension also have a voice under the Edwards policy. They’ve spoken loudly—despite TBR’s efforts—that they are ready to welcome business and industry with open arms.
Baton Rouge’s ITEP committee can sift through the rhetoric and come up with any matrix they want, but, ultimately, the market and customers will decide what criteria is most important when deciding where to build or grow.
We better get it right.