BATON ROUGE – The direction state lawmakers choose on future tax break plans for industrial manufacturers could figure as one of the most hotly debated topics in the 2019 legislative session, according to a lawmaker who represents a portion of Livingston Parish.
The issue of local involvement or exclusive state decisions on the tax incentives through the Industrial Tax Exemption Program will rank as a top priority for many lawmakers, said state Rep. Clay Schexnayder, R-Gonzales.
The debate will come into play after the East Baton Rouge School Board voted last month to reject a request from ExxonMobil for a $2 million exemption over the next 10 years for expansions at the Baton Rouge refinery, whose total work force includes approximately 3,700 employees on the company payroll and another 2,300 contractors.
As the largest refinery in Louisiana, and fourth biggest in the United States, the state cannot afford to risk the benefits from employment, property tax, and sales tax it has reaped from the refinery, whose roots in Baton Rouge date back to 1909 when it operated under the auspices of Standard Oil of New Jersey (Esso).
“Look at Exxon and what they’ve done in the past as far as taxes and jobs and commitments to schools and United Way, but now you have Exxon,” he said. “They’ve been really good not only to Baton Rouge, but a region of more than a dozen parishes, and we’re going to deny them a right to expand and cut money into the district?”
Schexnayder said he sees both sides on the “local vs. state” debate on the decision for ITEP, but the state cannot handle a repeat of the EBR rejection.
The elimination of nearly 700 jobs at the Georgia-Pacific paper mill in Port Hudson -- coupled with 120 jobs cut through Thompson Piping’s consolidation with a Texas plant and 54 pink slips from the shutdown of a BASF facility in Zachary – adds to the poor timing on the decision against ExxonMobil, he said.
The global petrochemical giant already took one step away from Baton Rouge when it shifted plans for a polypropylene plant from Baton Rouge to Baytown, Texas.
Schexnayder represents one of the larger petrochemical regions of the state. Along with Livingston Parish, his district includes Ascension, St. James, and John the Baptist parishes.
He represents the southeastern portion of Livingston Parish, where he estimates that 70 percent of the households rely on paychecks from the petrochemical industry. Many commute daily to plants along the Mississippi River in St. James, Ascension and St. John the Baptist, along with EBR and Iberville, he said.
Schexnayder fears a ripple effect that could extend beyond ExxonMobil and into the entire region.
“You also have to look at it from the industry standpoint and realize that if Exxon quits doing this and won’t expand any more, that plant is going to slow down as we’re going to start losing jobs like we did with Georgia Pacific and others that close down, we lost jobs and then where do we go?” he said. “You need some local input, no doubt, but ITEP is something we’ve done in the past and whether it’s 100 percent right or 100 percent wrong, it’s worked pretty well. Could it be done a little better? Maybe so, but the numbers don’t lie.
Marathon Oil, which operates near the St. James Parish city of Grammercy, sought other facilities for expansion in 2016 after hikes in utility rates and taxes.
“All of these moves are piling up and make it harder and harder for these companies to come in here and do expansions to grow, create jobs and learning opportunities,” he said. “I’d like to know how many people through their jobs at Exxon were able to send their kids to college. If it wasn’t for those Exxon jobs, those kids may have not gone to college.”
Schexnayder said he would favor a consolidated process on the local level that brings together representatives from taxing entities – parish council, sheriff’s office and school board – to one board, rather than each making a separate call on the ITEP request.
It would represent a similar approach used in Texas, which LABI President Stephen Waguespack credits for the Lone Star State’s success in luring large manufacturing jobs.
The end result must help keep jobs in Louisiana and lure new ones, Schexnayder said.
“The current situation affects more than just one little area – it affects the entire state,” he said. “It affects thousands of families who count on those plant expansions and turnarounds to keep those jobs going and keep those plants moving.”