Though new rules intended to streamline and simplify the state’s Industrial Tax Exemption Program, or ITEP, have been proposed by Gov. John Bel Edwards and are awaiting approval by the state Board of Commerce and Industry, controversy over the program continues in East Baton Rouge Parish.
The latest flap is over a measure that comes before the Metro Council on Wednesday. It essentially calls for the council to rubber stamp any property tax abatement applications under ITEP that the state has already signed off on.
The resolution by Councilman Matt Watson states: “The EBR Metropolitan Council shall approve those projects which are found by Louisiana Economic Development Department’s cost-benefit analysis to produce a positive return on investment to East Baton Rouge Parish and have been approved by the Louisiana Board of Commerce and Industry.”
But the community group Together Baton Rouge—a critic of the incentive program and the leading force behind controversial changes the Edwards administration made to ITEP in 2016—opposes the resolution and questions how LED conducts its cost-benefit analyses.
Citing a May 4 email from LED’s executive counsel, TBR says by its own admission LED does not conduct a formal return on investment calculation for each ITEP application but, rather, LED Secretary Don Pierson “relies upon his review of the contract terms and his experience over 28 years in local and state economic development to reach his conclusion.”
TBR says the email is evidence that LED isn’t giving ITEP applications the close scrutiny they need and, consequently, why the Metro Council should not automatically sign off on LED-approved applications, as Watson is proposing.
LED Press Secretary Gary Perilloux says TBR is oversimplifying the evaluation process that LED staff uses to evaluate ITEP applications. Though the department does not use a popular modeling software known as IMPLAN to calculate the potential ROI of every ITEP application, he says the department does use a complex formula to measure the cost-benefit analysis of awarding local property tax breaks to manufacturers.
“We have a process that we use and have always used,” he says. “Together Baton Rouge would like to see something different done.”
Though the dispute may seem arcane, it is significant because it underscores how unsettled the future of ITEP applications are, at least in East Baton Rouge Parish.
Late last month, the state unveiled its new rules for the program, which has been in a certain degree of turmoil since Edwards’ 2016 executive order giving local governments more say in whether to grant property tax abatements under ITEP. The proposed changes were intended to alleviate some of that confusion and put in place a standard set of rules all local taxing authorities can follow when deciding whether to approve applications.
The state Board of Commerce and Industry will hold public hearings on the proposed rule changes later this month and again in June, and will vote on the changes June 27.
It is unclear whether this latest local spat will threaten to derail that approval process or timeline.
