ITEP requests under fire at BC&I meeting

An estimated three dozen activists gathered this morning in protest outside the building where the Louisiana Board of Commerce and Industry is scheduled to consider requests for some $1.8 billion in corporate tax incentives at its monthly meeting.

Several property tax abatement requests under the state’s controversial Industrial Tax Exemption Program are drawing fire from the advocacy groups, led by Together Louisiana, which, since 2016, has pushed the state to tighten the rules governing corporate tax breaks—especially ITEP abatements. (Full disclosure: Manny Fajardo, a member of the state Board of Commerce and Industry, is an employee of Louisiana Business Inc., parent company of Business Report.)

One request, in particular, has come under scrutiny: Marathon Oil’s application for an ITEP abatement at its Garyville refinery, which would be worth $43 million over 10 years.

Together Louisiana alleges the company is attempting to defraud the state by submitting an exemption request on a capital investment the company made in 2018 under an older, advance notification the company submitted to the state in 2014, prior to rule changes by the state.

Gov. John Bel Edwards issued an executive order in 2016 tightening ITEP regulations and giving local governments a voice in approving industrial property tax breaks in its respective jurisdiction. However, the order grandfathered in companies that had filed an advance notice with the state of their intention to do a capital project prior to the rule change, thereby allowing those companies to receive the tax break under the old, more generous rules.

Together Louisiana, which used state records to compare Marathon’s 2014 request with the request before the board today, found discrepancies that seemingly indicates the company is trying to get an ITEP abatement on the 2018 work using the 2014 application, which appears to have been changed, potentially fraudulently.

“This is a new project Marathon is seeking a break on, but they don’t want to go to the locals because they know they’ll be rejected,” says Broderick Bagert, an organizer with Together Louisiana, who discovered the questionable application. “So they’re using an old application and an old number. And LED is enabling this.”

LED spokesman Gary Perilloux said Thursday the department cannot comment on the discrepancy but that it was looking into Together Louisiana’s allegations. As of this morning, however, the department had not asked the company or the BC&I to hold off on considering the request and the issue was still up for consideration.

Marathon’s corporate spokesperson, meanwhile, denies the company is submitting a fraudulent application.

“Marathon Petroleum Corporation filed advanced notifications for the projects as required under the program guidelines,” says corporate spokesperson Jamal Kheiry. “We are submitting the applications in full compliance with the rules of the program.”

The controversial Marathon request is one of several items on today’s BC&I agenda drawing criticism from Together Louisiana and comes some five years after the group began pushing the state to reform what it calls “corporate welfare” programs that allow the state to grant property tax breaks at the expense of cash-strapped parish and local governments.

While Edwards came under fire from many in the business community for the reforms that were part of his 2016 executive order, Together Louisiana points out that today, there are still many problems with the system, the Marathon Oil request of which is just the most extreme example.

“Two things can be true at the same time,” Bagert says. “Something that was absolutely horrible can be better than it was and also there can still be many problems with the system and there can still be really egregious abuses inside of that system.”