Though pleased with one of the “process changes” Gov. John Bel Edwards’ administration hopes to make to the Industrial Tax Exemption Program, local business and industry organizations say any further potential changes merit greater industry input.
Edwards’ administration is pushing to prevent local governments from instituting blanket bans on exemptions for projects that are already completed or under construction. Such a tweak would directly impact Baton Rouge, which adopted guidelines that prohibit exemptions for work that has already been completed. (This played out last year when two requests from ExxonMobil were rejected, largely because the company had already finished the project.)
The anticipated move is among several being spearheaded by Louisiana Economic Development. It comes as a relief to business and industry leaders, who have argued the program, since being overhauled by Edwards in 2016, brings a great deal of uncertainty to large companies looking to locate in Louisiana.
“I’m glad the administration realizes ITEP is in need of major repair, but I hope they’re willing to work with everyone—not just local governments and Together Louisiana,” says Stephen Waguespack, LABI president and CEO. “There needs to be input from business and industry so we can get this working again, and we’re ready to sit down whenever they’re ready.”
Adam Knapp, president and CEO of the Baton Rouge Area Chamber, argues the potential tweak is really a clarification of existing rules.
“The ITEP rules have been in place for years now,” he says. “This is not a change in interpretation; it just hasn’t been executed at the local level with fidelity to what the state created.”
At the heart of the issue, says Knapp, is one question: Who creates the rules for the program—the state, or the local governing authorities? The state technically governs ITEP, but local communities, whose taxes are impacted by the program, have been allowed to create conflicting guidelines, which Knapp says have occasionally superseded even the governor’s authority and need to be corrected.
Connie Fabre, president and CEO of the Greater Baton Rouge Industry Alliance, says her organization has been facilitating group discussions among ITEP stakeholders, who eventually plan to come forward with some proposals on their own. Chiefly, they believe the public needs to be more educated on the ITEP process and why companies would request an exemption even after their project is complete.
“Companies seeking ITEP have to file an advanced notice first, and sometimes they can’t calculate the value of the incentive until the project is built,” Fabre says. “It’s better to be working with the most accurate numbers possible, especially if they’re getting an incentive for it.”
The plans are also floating amid reports showing Louisiana lost 7,000 construction jobs last year. David Helveston, president and CEO of ABC Pelican, says, while at a high level, he “applauds the administration’s effort to provide clarity and some uniformity to the process,” his construction firm members crave “a key, single decision-maker at the local level rather than three,” which they believe would allow for a smoother and more efficient process.