Louisiana’s industrial tax exemption will cost local governments $16.7 billion in property taxes over the next 10 years without any input from the local governments losing the property tax revenue and no evaluation of return on investment, according to a new report released today by Together Louisiana.
The cost comes out to roughly $536,000 in subsidies per job for the 31,150 jobs expected to be created over the next 10 years, Together Louisiana says.
The industrial tax exemption allows manufacturing companies to exempt 100% of local property taxes on new equipment. The exemption is overseen by the Louisiana Board of Commerce & Industry. It is granted on a 10-year basis to businesses for equipment purchased for both expansion and routine replacement of aging equipment.
Together Louisiana, in its report titled “Costly and Unusual: An Analysis of Louisiana’s Industrial Tax Exemption,” calls on Gov. John Bel Edwards to make sweeping changes to the program, as the state’s constitution allows him to do.
Among the recommendations: Allow local governments to approve any and all exemptions made by the board, require businesses to provide a return-on-investment analysis on the planned investment, and exempt school district taxes from the industrial tax benefit.
In East Baton Rouge Parish, the program will cost the city-parish government more than $664 million over the next 10 years, according to the report. That is almost 1.5 times the amount of total property taxes, nearly $447 million, paid by the parish 214,553 property taxpayers in 2015, the report states.
The biggest loser is the East Baton Rouge Parish School System, which the report says will lose out on an estimated $26.8 million annually over the next 10 years.
Other parishes Together Baton Rouge says will lose out on large chunks of property tax revenue over the next 10 years are Cameron Parish at $5.3 billion, Calcasieu Parish at $2.97 million and St. Charles and Ascension parishes at $1.3 billion each. Those four account for more than half the subsidies for the next 10 years, according to the report.
The report says the annual cost to school districts across the state is $587 million total—about three times the cost of implementing universal pre-K in Louisiana, estimated at $185 million. East Baton Rouge is one of 34 parishes that could implement the program with the recouped property tax revenue, Together Baton Rouge surmises.
See the full report and the East Baton Rouge Parish breakdown.
