Governor's order marks big shift in tax incentive policy - FOX 8 WVUE New Orleans News, Weather, Sports, Social

Governor's order marks big shift in tax incentive policy

ExxonMobil oil refinery in Baton Rouge; the company received industrial tax exemptions from Louisiana worth $263,647,394 between 2008 and 2015 (Photo source: Adbar/shared under Creative Commons license) ExxonMobil oil refinery in Baton Rouge; the company received industrial tax exemptions from Louisiana worth $263,647,394 between 2008 and 2015 (Photo source: Adbar/shared under Creative Commons license)
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    Incentives. Subsidies. Corporate welfare. Call them what you will, but the state writes the checks every year, and everyone from oil and gas giants to film and TV producers is getting millions from Louisiana tax coffers.more>>
    Incentives. Subsidies. Job Creators. Corporate welfare. Call them what you will, but the state writes the checks every year, and everyone from oil and gas giants to film and TV producers is getting millions from Louisiana tax coffers.more>>
NEW ORLEANS (WVUE) -

When Governor John Bel Edwards announced his executive order on industrial tax exemptions late Friday, he simply underscored the worries of many of Louisiana's biggest corporate residents: their taxes may be on the way up.

But the move also represents a potential break from a 41-year precedent.

Louisiana has given manufacturing firms more than $16 billion in property tax breaks in the last decade alone, all with the understanding that these industries would create thousands upon thousands of jobs for Louisianans who need them.

"If these really were stimulating something to occur that wasn't going to occur otherwise, you should have had a huge surge in job creation," said Greg LeRoy, executive director of the nonprofit watchdog Good Jobs First, in a 2015 interview for FOX 8's Easy Money investigative series. "You should have an extremely low unemployment rate. You should be, you know, flagging people in at the state border, piling in for jobs like it's North Dakota or something. That's not what I've read is going on in Louisiana."

The latest available Bureau of Labor Statistics data, from May, peg Louisiana's unemployment rate at 6.3 percent; nationally, it's 4.7 percent.

Since 1974, as the AP's Melinda Deslatte reports, the Industrial Tax Exemption Program has been administered with little more than a rubber stamp by the Governor's Office and the Board of Commerce and Industry. There has been little accountability for actual job creation. Gov. Edwards' order changes that.

"Louisiana Economic Development (LED) will create Cooperative Endeavor Agreements for each ITEP application," Edwards said in a statement to news media Friday, "with local governments (parish governing bodies, municipal governing bodies, school boards, and sheriffs) providing input on the percentage of tax exemption to be granted, based upon the attractiveness and economic impact of each project. Each manufacturer applying for the exemption also must agree to create new jobs beyond existing employment, retain existing jobs, or both."

Even as the governor announced his executive order Friday afternoon, the Commerce and Industry Board considered 558 new applications for ITEP, by manufacturers pledging to create 1,851 permanent jobs and employ more than 21,000 construction workers. The cost of these latest exemptions has not been announced - and because the executive order takes effect after the date it was issued, they apparently will not require new CEA's with the state. 

Local governments in particular have carried a heavy burden to pay for these exemptions. A study by the advocacy group Together Louisiana finds local bodies missed out on $16.7 billion in taxes over a 10-year period. That means less money for education, public safety, roads and bridges and a host of other civil services.

That same Together Louisiana report, citing LED data, finds only 31,150 permanent jobs were created over those 10 years by companies receiving ITEP incentives.

Politically, Gov. Edwards' action sends a clear message following a lackluster special session to address state budget gaps: The Amite Democrat may have failed to push his complete agenda through his old legislative stomping grounds, but he still has power under the state constitution to kick off a dramatic policy shift, all on his own.

The move also puts him further at odds with industrial interests. Stephen Waguespack of the Louisiana Association of Business and Industry, a lobbying powerhouse, told the Greater Baton Rouge Business Report the governor is gutting the program, which Waguespack calls "one of the most important economic development tools we have here." LABI and other business interests hold a lot of clout in Baton Rouge, given their capacity to pour cash into politicians' campaign chests

You can learn more about Louisiana's tax incentives programs in Lee Zurik's Easy Money investigation, online at FOX8Live.com/EasyMoney.

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