Perhaps one day in the future, Baton Rouge – well, Louisiana in general – will have the local economic and political leverage to decline requests via the Industrial Tax Exemption Program (ITEP); but last Thursday at an East Baton Rouge Parish School Board meeting was not that day.
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Now, it’s important to note that as of last year the state’s rating system for school systems has become more strict. Livingston Parish, for instance, fell to a B rating for the first time in some years. However, Superintendent Rick Wentzel said, quite simply, that the system would adjust, teachers would rise to the challenge, and so would the students.
A strong statement and, if past history is any indication, it’s a believable sentiment from a group of folks in Livingston Parish who work hard to keep our schools humming.
Did East Baton Rouge issue the same edict? Perhaps, but that system is facing extreme pressure – surrounded by two rogue districts in Central and Zachary that grade out well, year-over-year, and ever-improving systems in Ascension, West Baton Rouge, and Livingston – the parish in which the Capitol rests had to do something.
So, with the constant threat of the Woodlawn school district separating via ‘The City of St. George,’ the EBR School Board went for the low-lying fruit – denying a tax exemption for ExxonMobil, upon which it’ll pay a hefty sum.
Within 24 hours, ExxonMobil released a corporate statement calling the perception of Baton Rouge “inconsistent” and stating the company will have to reassess future investment.
That response comes as no surprise, and time will tell if ExxonMobil chooses to follow through on its ominous musings and begins to pull future investment capital and relocate it elsewhere – numbers which will be discussed later.
First, the timing of this could not have been worse for the Baton Rouge area. Exxon employs nearly 7,000 people directly at an average wage of $74,158, according to Loren Scott, a well-known economist out of LSU.
Indirectly Exxon creates or supports one out of 10 jobs in the nine-parish capital region – that’s quite a bit of capital, not to mention $32.7 million in property taxes, $1.4 million to the United Way, $1.1 million in capital contributions to LSU and Southern University … the list goes on.
Now, not too far away in the northern part of the parish, three industries shut down or experienced major layoffs due to lack of profit. Those three industrial magnates were huge funding mechanisms for what has become one of the Baton Rouge area’s golden children school district – Zachary.
The long-term effects of those closures has yet to be realized, but consider the fact that less than 14 days after that occurred the East Baton Rouge Parish School Board declined an ITEP request – which spurred ExxonMobil to pull all of its current requests for exemption, and contemplate future investment dollars.
That was a power move by ExxonMobil, to be sure, but it’s hard to argue the board had any real staying power to make this decision. A reduction in both industrial and technological investment for these plants could, in the future, cause them to become less productive and, eventually, less profitable.
Citizens now have a case study in what happens when those issues come to a head.
Currently, Louisiana sits dead last in education, infrastructure, and business-friendly tax law – these are not opinions, they are facts, and considering those points many of us should be thankful that we live in Livingston Parish where, at least education, is a focal point. Now, has a focus been drawn to ways to improve these issues? Absolutely. Can Louisiana figure out a way to improve them in a way that works for everyone? That remains to be seen, but this wasn’t a good start.
Why? It, potentially, threatened the jobs of thousands. Those thousands, and the jobs they create via the multiplier, pay sales taxes when they shop and personal income tax to the state – which is Louisiana’s largest form of tax revenue. Threatening those revenue streams before the state has more sustainable economic practices in place is just bad business.
Sure, East Baton Rouge Parish schools may realize some immediate benefits – but how will they spend that money? Notice that Livingston Parish schools didn’t ask for more money when the requirements got more strict, they just said, “We’ll adjust and do better.” Stewardship of tax dollars is just as important as the money itself – it’s real easy to blow cash on unimportant things.
And when you look at the history of tax-dollar stewardship, Louisiana as a whole is a case study on how not to manage funds.
To reiterate – the Bayou State is making progress on expecting better education, and how to further those goals. Attention has been drawn to infrastructure issues; now how do we fund it? But, that’s progress, not answers. Louisiana is not competing with Texas. That won’t be a popular statement, but it’s true – local municipal boards have to cut major sources of tax dollars just to attract businesses here, whereas they’ll accept anything Texas will throw at them because their rankings in education, infrastructure, and tax law are more acceptable and less cost-prohibitive with regard to employee training, vehicle maintenance and ease of transport, and cost to interpret and enact tax qualifiers.
Instead, Louisiana is competing with Mississippi, Florida, and Alabama for these industries – and by cutting these tax exemptions or, at least, leaving them unpredictable, our ability to attract business is hamstrung by a lack of reliability.
The lesson? Don’t poke the sacred cow unless you have a Plan B – and Baton Rouge doesn’t have a Plan B. Who knows? Maybe this will attract more business to Livingston Parish as boards here seem, at least in the immediate comments, more willing to provide ITEP exemptions.