Louisiana News

Louisiana senate committee passes bill to make industrial tax break tweaks permanent

(The Center Square) — Legislation to make permanent tweaks to Louisiana’s Industrial Tax Exemption Program (ITEP) that Gov. John Bel Edwards implemented through executive order in 2016 has cleared the Senate Revenue and Fiscal Affairs Committee.

The committee approved Senate Bill 151, sponsored by Sen. Rogers Pope, R-Denham Springs, without objection on Monday to enshrine the ITEP changes made through executive order into the Louisiana constitution.

The changes reduce the tax breaks from 100% previously to what’s now 80%, and gives local taxing authorities including school boards, sheriff’s offices, and local government councils where the industrial facilities locate the ability to approve or reject the tax exemptions.

“In my opinion, it’s not that controversial,” Pope told the committee. “It’s about protecting the authority local governments have over giving away their local property tax dollars to business and industry, or a small portion of that, anyway.”

For years, the Louisiana Board of Commerce and Industry was the sole entity responsible for approving or rejecting ITEP exemptions of 100%, and virtually all exemptions were approved. Changes in Edwards’ executive order allowed local taxing authorities to approve or reject exemptions for a portion of the tax revenues, though local officials told the committee most applications are still approved.

Pope said the intent of the bill is to protect the changes from future administrations that could easily repeal Edwards’ executive order by enshrining the changes in the state constitution. That process requires two-thirds approval in both chambers of the Legislature, as well as approval from voters.

SB 151 limits exemptions to 5 years, and requires companies to meet all conditions of the agreement for an extension. It also requires the Board of Commerce and Industry to provide analysis of costs and benefits for each proposed ITEP exemption to local governments.

Numerous parish presidents, as well as school, city and sheriff’s officials testified in favor of the bill, which they said would codify changes to bring continuity and predictability to the ITEP program. Capping the ITEP exemption at 80% also has brought more money into local coffers, they said.

“Now we’re getting 20%, which we never got anything before,” said West Baton Rouge Parish President Riley Berthelot. “It was the state, we didn’t have a voice. So now I think it’s good that we can actually see some of the money.”

The changes allow local officials to gather with company officials to vet projects for impacts to schools, traffic, the environment, and jobs, he said.

“Continuity and predictability is something these businesses are looking for and if we put it in the constitution, I think it goes a long ways,” said St. Bernard Parish President Guy McInnis, who serves on the Louisiana Board of Commerce and Industry.

The bill is also supported by the Louisiana Assessor’s Association, Louisiana Progress Action, the Police Jury Association of Louisiana, the Louisiana School Boards Association, Together Baton Rouge, the Professional Fire Fighters Association of Louisiana, as well as numerous officials representing police, schools, and parishes.

Business interests including the Louisiana Association of Business and Industry (LABI), the Louisiana Chemical Association, the Louisiana Oil & Gas Association, the Louisiana Mid-continent Oil and Gas Association, and representatives from oil and gas companies and the building and contractor trades opposed the bill.

Jim Patterson, LABI vice president of government relations, told the committee enshrining the changes in the state constitution is “highly inadvisable” because it restricts “the agility of the state to respond to forces that operate within the marketplace.”

“This is necessarily a program that’s intended to make us competitive with the other states that are looking for the same manufacturers that we are,” he said.

Patterson argued the changes implemented in 2016 are already hurting the state’s ability to court big business, citing applications for ITEP that have steadily declined in recent years, from 788 applications in 2015, to 619 in 2016, to 197 in 2017, to 150 in 2018, and 146 in 2019. Those figures continued to fall during the pandemic to 89 in 2020 and 86 in 2021, he said.

“I urge you strongly not to go down this road,” Patterson said.

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