Three years after Gov. John Bel Edwards’ administration overhauled the state’s Industrial Tax Exemption Program, capping exemptions at 80% and giving local governments the authority to deny the incentive to manufacturers in their jurisdiction, more than $116 million has been returned to local governments around the state.
That’s according to an analysis by the community organization Together Baton Rouge, which was a driving force in 2016 and 2017 behind the changes to the 80-year-old program.
The group will present preliminary findings of the analysis at its annual delegate meeting tonight.
For East Baton Rouge Parish in particular, the analysis suggests local governmental entities have realized more than $10 million in new revenues by denying certain ITEP applications. Of that amount, $5 million has gone to East Baton Rouge Schools, $1.5 million to the East Baton Rouge Parish Sheriff’s Office, $1.4 million to BREC, $1.1 million to the library system, $900,000 to EMS and mental health services and $900,000 to city-parish government.
“Louisiana’s way of granting these exemptions, historically, was out of line with both how they were awarded in other states and also the scale of what they were getting for what they were giving away, and that is part of why local governments have had trouble providing the services we need,” says Rick Moreland, one of some 30 TBR volunteers who worked on the analysis. “It seems like Louisiana is fixing the problem. I think it’s good news.”
The analysis also shows that before the changes to the program went into effect in 2017, 70% of industrial properties in East Baton Rouge Parish were granted property tax breaks under ITEP. In 2019, that figure had fallen to 54%, resulting in an increase in property tax revenues from nearly $36 million to $46.3 million.
The results from TBR’s preliminary analysis come as the 3-year-old changes to ITEP— which industry views as a sacred cow and critics decry as corporate welfare—are coming under fire from business groups and a Republican Legislature.
In February, Gov. John Bel Edwards, who implemented the sweeping changes to ITEP with his 2016 executive order, again changed the program, giving the state’s Board of Commerce and Industry authority to overrule local ITEP rejections if the local denials were based on rules that conflict with state rules.
Baton Rouge Area Chamber President and CEO Adam Knapp, who has not seen the TBR analysis, says the results are not surprising and are not seen as a bad thing by the business community.
“I don’t think it will come as a surprise that local governments have benefitted from the changes and we have not been pressing for a return back to pre-2016,” Knapp says. “What we have said is that the program changes have to have stability and predictability.”
