News Alert: Baton Rouge area legislators drafting bill to return ITEP to state control

Two Republican state lawmakers plan to file legislation that would return sole authority of the Industrial Tax Exemption Program back to the state, essentially restoring the process in place before Gov. John Bel Edwards’ 2016 executive order gave local governments a say in granting the property tax exemptions.

Sen. Mack “Bodi” White, R-Central, and Rep. Franklin Foil, R-Baton Rouge, will co-file the bill in the upcoming legislative session, which begins April 8. They say it will restore a “consistent process” for manufacturers applying for the lucrative property tax breaks.

White, in a statement, specifically cites the East Baton Rouge Parish School Board’s recent rejection of two ExxonMobil ITEP requests, which prompted the company to withdraw the applications and question its future growth in Baton Rouge.

“The decision by the EBR school board to remove ITEP incentives from ExxonMobil is one of the most short-sided actions I have ever seen from an elected body,” White says. “ExxonMobil directly employs nearly 7,000 people locally and pours hundreds of millions of dollars into our economy every year. We have to do something.”

Businesses must be confident that “we’re not going to keep changing the (ITEP) rules,” Foil says, in order for Louisiana to grow and remain competitive.

Meanwhile, the directors and officers of the Baton Rouge Area Chamber published a letter Sunday expressing concern over the region’s economic uncertainty following ExxonMobil’s decision to withdraw its 2017 ITEP requests.

The school board rejected the requests, saying the property tax exemptions in question were for projects the oil and gas giant had already completed.

Edwards’ overhaul of the 80-year-old program in 2016—enabling local taxing authorities a vote in whether to exempt its taxes—sparked widespread industry concern, and confusion followed as parishes struggled with the newfound power. So in 2018 the Edwards administration again issued new rules, this time giving the state authority to evaluate and conditionally approve exemptions, while capping the incentives at 80% for 10 years—down from 100%.

But local governments maintained the right to veto the tax breaks, which come out of their budgets. East Baton Rouge Parish has grappled over these decisions, and both the school board and Metro Council issued their own sets of ITEP-approval standards.   

The ExxonMobil requests, though approved by the state, failed to meet the school board’s requirements. The rejection prompted industry leaders to rebuke Baton Rouge as an “unpredictable” environment for business investments.

“The impact this could have on our city, parish and state could be catastrophic unless we take immediate action,” Foil says.

White and Foil are still working through details of the bill, but plan to have a final version in coming weeks.