Potential rule changes to the state’s Industrial Tax Exemption Program would cap property tax abatements awarded to manufacturers at somewhere between 75% and 80% for the 10-year life of the incentive, thereby enabling local governments to start collecting at least some property tax revenues from the outset, says Robert Adley, who chairs of the rules committee of the Board of Commerce and Industry, which oversees the program.
More significantly, the rules would give local taxing authorities across the state a uniform set of guidelines to follow when trying to determine whether to grant the incentive, and would give the manufacturers applying for the abatement a clear picture of how much of a tax break they’ll get over the course of a decade.
“The goal is to figure out how to simplify the process both for the business community that is hollering about needing stability and the local governments struggling with how to set up guidelines to deal with this,” Adley says. “We’re looking at things to simplify the process for everybody.”
The state’s involvement in writing new rules for the program comes after local governments have spent more than a year trying to figure out how to administer ITEP, an authority Gov. John Bel Edwards granted them some 18 months ago with a controversial executive order that effectively ended the state’s 80-year-old practice of rubber stamping local property tax abatements for industrial manufacturers.
Adley says after hearing for months from both local governments and the business community that the changes were causing more problems than they were solving, the state began looking at ways to create a uniform set of rules. He says while some parishes, like heavily industrial Ascension and St. James, were making progress with the administration of ITEP, some, like East Baton Rouge, were still grappling with it and most didn’t even know how or where to begin.
“You’ve got 64 parishes and 50-plus of them didn’t know even know what to do,” he says. “Some were just saying let’s keep with the status quo.”
Before the executive order, the state routinely granted full five-year ITEP tax abatements with automatic five-year renewals to manufacturers, depriving local governments of millions of dollars in property taxes.
Adley says the work local governments have done over the past few months in trying to establish ITEP rules for their areas has not been in vain. Some, in fact, will likely be incorporated in the new rules the state is drafting. He says he is hopeful both business interests and those that have been pushing to tighten the program in order to funnel more money to local governments will be able to live with whatever the Board of Commerce and Industry ultimately approves.
“If everyone out there is 100 percent okay with any changes than we haven’t done a very good job,” he says. “This will be a compromise. Everybody’s got to give a little.”
Edwards told Daily Report Wednesday he hopes the new rules will be in place by July 1.
