The local business community, fearful of the fallout from the ongoing controversy over the Industrial Tax Exemption Program, breathed a sigh of relief in early March when ExxonMobil announced Baton Rouge as the site of a major expansion project worth more than $500 million.
ITEP critics rejoiced as well, declaring this a tax-break worthy project that proves the state’s overhauled tax incentive program won’t chase industry away.
But that rare moment of mutual celebration didn’t last. Industry leaders wasted no time assuring the community the ITEP debate is far from over.
While praising ExxonMobil’s decision, industry groups called attention to the long and difficult process it took to land the project, criticizing the ITEP issues that threatened to torpedo it. In the same breath, they reiterated calls to reform the program, upended in 2016 when Gov. John Bel Edwards turned power over to local governments.
In other words, yes, the ExxonMobil expansion—which has already received ITEP approval—is a win. But don’t think for second that ITEP battles are a thing of the past.
Making its point, the Louisiana Mid-Continent Oil & Gas Association reminded Baton Rouge of all the investments the city may have missed out on while fumbling with its newfound control of the tax-incentive program.
“We cannot ignore that the vast majority of investments from ExxonMobil’s Grow the Gulf initiative have been made with our neighbors in Texas,” LMOGA President Tyler Gray says. “While congratulations are in order, Louisiana needs to focus on the process for incentive programs and the push for further refinement of the rules.”
Indeed, most of ExxonMobil’s major investments have been made in Texas, including a $10 billion ethane cracker project that went to Corpus Christi over Louisiana. The Bayou State, meanwhile, has attracted just three projects of significance—a sulfur expansion in Baton Rouge, a Port Allen aviation lubrication plant and the most recent expansion announcement.
Whether that’s a result of the ITEP debacle, remains debatable.
Arguments over ITEP and how it affects economic development will undoubtedly go on into the foreseeable future as industry continues its push for further reform of the tax break program, hoping to ease the process so that it’s more business friendly and competitive.
That raises another question: How exactly can we streamline the program as it becomes increasingly clear local input is likely here to stay? There are ideas, like creating a single point of contact for each parish, proposed by the Louisiana Association of Business and Industry.
Together Baton Rouge, which has been the most vocal ITEP critic by far, has already signaled opposition to such an idea. The community group wants the ITEP approval process to remain the way it is now—with input from all local taxing authorities and approval reserved for projects of actual economic value, like the ExxonMobil expansion.
“This is how real economic development is supposed to work,” says Together Baton Rouge leader Rev. Lee Wesley. “This is ITEP reform.”
The state, though, via Louisiana Economic Development, has said it’s open to ideas for future ITEP reforms as long as local input remains.
So stay tuned. Though the boiling debate over ITEP may have been reduced to a simmer following the ExxonMobil announcement, the familiar rhetoric is sure to reach peak volume once again as soon as ExxonMobil or any other industrial behemoth eyes Baton Rouge for another major investment.