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Political Horizons: Battle over Exxon tax breaks may spark legislation

February 4, 2019
By Mark Ballard
Originally Posted on The Advocate

Those around the country trying to comprehend a federal lawsuit over a referee’s call, or rather lack thereof, need look no further than the business community’s reaction to the Baton Rouge school board not embracing a $2 million tax break for one of the world’s largest corporations.

“When one of the state’s largest employers is negatively impacted by our anti-business culture, all of Louisiana loses,” Tyler Gray, president of the Louisiana Mid-Continent Oil & Gas Association, said in a statement about ExxonMobil’s decision to withdraw Industrial Tax Exemption Program requests pending before the Baton Rouge Metro Council and East Baton Rouge Parish Sheriff’s Office, after the parish school board opposed giving up its portion of its property taxes to the corporation.

ExxonMobil stated the action was necessary because the school board’s decision exposed “ongoing uncertainty” involving ITEP.

The Baton Rouge Business Report last week blamed that precariousness on left-wing activists made up mostly of — spit, spit — “Democrats, teacher union members and some from the faith-based community.”

Louisiana Chemical Association President Greg Bowser said the changes made to ITEP earlier this year “sends a signal to companies that Louisiana is an unpredictable place.”

Stephen Waguespack, president and CEO of the Louisiana Association of Business and Industry, is scheduled to weigh in Monday at the Press Club of Baton Rouge.

That Louisiana is somehow “anti-business” and chasing manufacturers to Texas, as the Henny Pennys claim, seems to forget that for nearly a decade state government annually came up about $1 billion short in revenues while giving about $13 billion in subsidies to business, according to Good Jobs First and Corporate Research Project, a leftist-oriented group in Washington, D.C.

What all this rhetoric is really aimed at is returning ITEP to the exemption it was before Gov. John Bel Edwards revamped the essentially automatic 10-year tax break, in which the state forgave revenues local governments use to pay for services like law enforcement, schools and roads. Edwards’ executive order requires “local weigh in” on the exemption applications that have been vetted by state officials and approved by the Board of Commerce and Industry.

Where the business community may have a point, however, is their contention that know-nothing local officials can negate millions, perhaps billions, of investment dollars in complex business arrangements. Half of the incumbent mayors and councilmen in last fall’s elections were ousted in favor of newbies, many of whom are discovering for the first time that governing is harder than their campaign slogans suggested.

Two Republican state legislators with stellar rating from various business groups — Sen. Bodi White, of Central, and Rep. Franklin Foil, of Baton Rouge — are putting together legislation for the upcoming session that would limit local involvement in ITEP.

But even that isn’t simple.

Foil said Thursday his aim isn’t so much to eliminate local involvement as much as it is to provide a more predictable structure. What legal wording is necessary to accomplish that goal is being researched now. He expects to meet with the governor’s staff as well as the business community to help him and White hammer out some sort of compromise.

The real hurdle is that this is the last session of a Legislature that hasn’t agreed on much in four years, and likely will be looking at all bills through a prism of how it will impact their reelection campaigns this fall. Foil hopes to address the issue with changes to state statutes, which would require 53 votes for approval, rather than sweeping changes to the Constitution, which would require 70 votes.

As head of the Louisiana Department of Economic Development, Secretary Don Pierson was the primary author of Edwards’ new ITEP procedures. He tried to balance criticisms of the 80-year-old program by local governments and activists with the wants of a business community happy enough with the status quo.

He opposes “the idea of not allowing their (local) voice,” Pierson said Thursday, adding that the new ITEP procedures “is a fair way to include the local voice. It is their revenue stream.”

Forty-three states offer a similar tax break and not a one includes a state mandate, he said.

ITEP is a go-to tool when trying to attract to and keep in Louisiana manufacturers whose businesses provided thousands of jobs paying $87,212 per year on average, he said.

The issue shouldn’t be about changing the rules to allow less participation but about making a better effort to detail how many jobs the project will create or keep and what that means to the community.

“The educational process has not been fully executed,” Pierson said.