BATON ROUGE – A Louisiana senator who represents portions of Livingston Parish and neighboring East Baton Rouge says he plans to coauthor legislation that would put the bulk of the decision on industrial tax break requests back to state control.
The EBR School Board’s rejection of the $2 million ITEP request from the ExxonMobil Baton Rouge Refinery last month threatens to push away other prospective manufacturing jobs, said state Sen. Mack “Bodi” White, R-Central.
“The uncertainty is not only about East Baton Rouge, but all of Louisiana,” he said. “They’re very leery about coming here.”
In the case of ExxonMobil, White said ITEP this was a deferment on the property tax for that equipment for a period of five to eight years.
“The whole plant stays on the rolls in the meantime, so we’re not deferring anything … it’s just a little help,” he said.
White compared the scenario to the Tax Increment Financing (TIF) which helped launch Bass Pro to Denham Springs.
“That has been one of the biggest catalysts for growth,” he said. “Sometimes a company asked for a little help to defer the costs of the project and put everything on the roll as you go forward plus you get all the spin off taxes from everything that develops around it.
“We don’t suspend the income tax or the corporate tax … still paying three or four different taxes,” White said. “Sometimes a company has asked for a little help to defer the costs of the project and put everything on the roll as you go forward plus you get all the spinoff taxes from everything that develops around it. We don’t suspend the income tax or the corporate tax … they’re still paying three or four different taxes. “
The changes Gov. John Bel Edwards initiated in an executive order in June 2016 imposed limits on the property tax exemptions from 100 percent to 80 percent.
In addition, the order required approval from parish governments through approval from the sheriff’s office, the school board and the parish council or police jury.
“Traditionally, the way we’ve done it for years, the state and LED recruit a project, they look at it and make a recommendation (regarding ITEP) yes or no, and it goes to a commerce committee appointed by the governor, and they make a recommendation and it goes to the governor,” White said. “If it’s not a good deal, usually it doesn’t go forward. But if it does go, and they say it will produce so many jobs and bring in this much money, and that doesn’t happen, the state can claw back dollars if they didn’t perform.”
White considers the approval process a complicated process which turns away prospective employers.
“Think about it: You’re the corporation, the president or vice President, and you have to sit down with 12 School Board members in East Baton Rouge, 10 or 11 council members, the sheriff and the mayor-president,” he said. “That’s a lot of people to convince to let you bring the projects.”
Stephen Waguespack, who discussed ITEP in an address Feb. 4 to the Press Club of Baton Rouge, called the process a “gauntlet.”
“You’re lucky if you’re able to get through that gauntlet unscathed,” he said.
After the Board of Commerce and Industry approves an ITEP contract, the local governmental entities have 30 days to reject or approve the Board’s decision.
If the application is placed on a public meeting agenda, the local governmental body has an additional 30 days for action. Should the board take no action, the application gains approval.
Opponents question the needs for the tax break because they say entities such as the school board need the revenue.
Retired Army lieutenant Russell L. Honore, in a story in the New York Times, said Louisiana has “allowed the oil and gas industry to hijack our democracy.”
“The industry will brag about it all the time, how well we’re doing in terms of business development. Well, if we’re doing so well, why are we the second poorest state?”
White said the state cannot afford to reject requests when businesses have cut jobs or left the state. He referred to the 600-plus job losses at the Georgia Pacific Port Hudson plant – only a month after approval for an ITEP – along with the cut of 120 positions at the BASF specialty plastics plant in Zachary and 54 jobs related to the Thompson Piping’s consolidation with the Texas plant.
“In Texas, all they have to do is go to Houston or Baytown or Corpus Christi where they can put the same expansion on that polypropylene plant, and it’s not near the problems they face here right now.”
The issue with ExxonMobil has already led the oil/petrochemical giant to withdraw future ITEP requests and seek project sites elsewhere, including Texas.
Residents outside East Baton Rouge Parish should consider the effect of industrial breakaways not only on the immediate area, but the entire state, White believes.
“This is not a Baton Rouge issue … it’s a capital region issue and indeed a state issue,” White said. “You have people from every one of these parishes and vendors and support services that supply the big facilities that ExxonMobil has.”
White does not know which direction the legislation will take once it reaches lawmakers at the State Capitol.
“I have no idea how the legislature will respond, but you have to start somewhere. I don’t have anything against the School Board … I really don’t. but look how many people have input into this to make that whole decision,” he said. "Opponents of the bills should talk to employees who work in manufacturing.”
He believes the state will ultimately feel the pain, not ExxonMobil.
“They’ve pushed back on announcing projects here just to see what East Baton Rouge would do and how the state will deal with it,” he said. “They could take jobs to Texas or even outside the country.
“It’s okay if you don’t want Exxon to be here -- they’ve been here over 100 years,” he said. “They’re the biggest company in the state, the biggest employer in the metro area, with probably hundreds – maybe thousands – of jobs for people in the Livingston Parish area alone.”