The confusion that has reigned over the administration of the state’s Industrial Tax Exemption Program in the nearly two years since Gov. John Bel Edwards scaled back the popular tax break and gave local governments more say so over whether to grant it, could be streamlined and simplified by the end of this summer. That’s assuming the Louisiana Board of Commerce and Industry approves in June a set of rule changes proposed today by the Edwards administration.
But it’s not at all clear the Board of Commerce and Industry will act that swiftly to approve the proposed changes, which Louisiana Economic Development officials have been working on for months to address concerns over ITEP that have arisen since Edwards’ July 2016 executive order.
At a nearly three hour meeting this morning, some board members—chief among them being Edwards’ own representative on the board, rules committee chairman Robert Adley—suggested LED was trying to push the changes through too quickly without allowing enough time for the rules committee to study them and for the public to weigh in. In the long run, Adley argued, that could lead to setbacks that drag out the process still further.
But LED Secretary Don Pierson argued that LED staff has spent several months meeting with all the stakeholders concerned about ITEP—including business and industry representatives, local governments, teachers unions, assessors and community groups—to get their input. All have been receptive to the proposed changes put forth today, he says.
“Each entity can see some real benefits to these proposed changes,” Pierson tells Daily Report. “Would they like more changes? Sure. Together Louisiana would like to see the whole program go away. LABI would like to see zero taxes for 100 years. But from each stakeholder’s perspective, I believe there is significant improvement.”
The proposed changes would cap the incentive program at 80% for 10 years, enabling local governments to collect at least some property tax revenues from the first year a manufacturer is in operation. They also would simplify and standardize the applications for industrial tax exemptions, and give the state the authority to evaluate and conditionally approve exemptions. Local governing bodies would still have the right to vote against them, however.
While there appears to be no organized opposition to the proposed rule changes, representatives of the community organization Together Baton Rouge/Together Louisiana, which first campaigned for overhauling ITEP in an effort to direct more tax money to cash-strapped local governments, say they’re concerned about the fast track the rule approval process is on.
“It seems like they’re trying to push it through without having it fully vetted,” says Together Baton Rouge leader Edgar Cage, who acknowledges his group was at the table when the new rules were crafted. “But we were meeting separately and individually. You need to have a community dialog with everyone in the same room because that’s when everything comes out.”
The board will discuss the rules at a May 22 meeting, at which time public comment will be allowed. Because of an administrative law, however, the official public comment period on the rule changes cannot be held until June 25. The board is tentatively scheduled to vote on the changes June 27.
A spokeswoman for ExxonMobil, which has a major capital expansion program for Baton Rouge hanging in the balance until the ITEP issue is settled, says the company needs to know by Sept. 1 what kind of tax break it can expect to receive if it’s going to make the investment in Baton Rouge.
