Subsidizing Big Business in Louisiana

Subsidizing Big Business in Louisiana

Posted by: Tim Mathis

A new report from Good Jobs First, a national policy center that promotes corporate and governmental accountability in the area of economic development, placed Louisiana at the top of the list for having one of the costliest and most ineffective tax exemption programs in the country. Louisiana’s Industrial Tax Exemption program exempts manufacturers from property taxes on expansions and investment projects for up to ten years. This causes a significant loss in revenue for local parishes across the state that affects their ability to fund services such as education, human services, and transportation infrastructure.

According to the most recent report from the Louisiana Board of Commerce and Industry, Industrial Tax Exemptions awarded in 2010 are estimated to cost Louisiana over $946 million over the next ten years. In 2009, Louisiana awarded exemptions worth $745 million and in 2008, over $614 million. That means that over a three-year time span, more than $2.3 billion in potential revenue has been lost in return for the creation of 7,256 potential new jobs.

The most recent report, dated August 2010, identified 592 companies and corporations across the state that qualified for the exemption. These companies employ over 206,128 jobs and created 2,537 new jobs. Louisiana consistently awards these ten-year property tax breaks for dozens of multi-national industrial giants that have little need for state subsidies.

Ten Companies that Benefited from Louisiana’s Industrial Tax Exemptions in 2009

Company Name New Jobs Created

Estimated Ten-Year Property Tax Exemption

Coca-Cola Bottling Company

10

$               17.5 million
Conoco Phillips Company 0 $               4.6 million
Dow Chemical Company 0 $               10.2 million
Exxon Mobile Corporation 0 $               17 million
Folgers Coffee Company 30 $               4.3 million
General Motors Corporation 0 $               18.6 million
International Paper Company 0 $               33 million
Marathon Petroleum Company 0 $               15.6 million
Proctor & Gamble Manufacturing 5 $               4.1 million
Shell Chemical Company 0 $               9.8 million

The current fiscal crisis in Louisiana is an excellent opportunity for legislators to reform Industrial Tax Exemptions. Bringing transparency and oversight to the program would go a long way to solving our revenue shortfall this year and for many years to come.