Giving away the farm…and the school

Giving away the farm…and the school

The community group Together Louisiana released a report Monday that looks at how much a state industrial tax break program is costing East Baton Rouge Parish.

Number of the Day

$69.6 million - 2017 property tax revenue lost in East Baton Rouge parish via the Industrial Tax Exemption Program (Source: Together Louisiana)

The community group Together Louisiana released a report Monday that looks at how much a state industrial tax break program is costing East Baton Rouge Parish. Although the Industrial Tax Exemption Program (ITEP) is touted as a tool to attract new industrial projects, the report found that the vast majority (99 percent) of exemptions went to firms already located in the parish. Only 6 percent of exemptions supported the expansion of existing facilities, while 94 percent went towards routine maintenance and upgrades. East Baton Rouge parish alone is set to lose $69.6 million this year because of the exemption – money that could be going to schools, infrastructure and public safety. Together Louisiana is urging local authorities to carefully consider these exemptions with their newly-granted powers of review.

A well-funded lobbying campaign is underway across the state to attempt to convince local school districts and other public bodies to grant automatic approval to industrial tax exemptions, without any analysis of whether the projects requesting subsidies require a subsidy or bring a public benefit. The campaign already has convinced one parish, West Feliciana, to grant prior approval to all future exemption applications, site unseen. Louisiana Economic Development (LED), the state agency which administers ITEP and which local entities are looking to for information, has declined even to give an assessment of how much the exemptions are costing those entities at the local level.

Stephanie Riegel of the Greater Baton Rouge Business Report talked with Iain Vasey, a former Baton Rouge Area Chamber executive who now does economic development work in Texas. Vasey said that Texas also requires local decision-making for a similar program, but the bigger issue for economic development isn’t incentive programs, it’s fundamentals like job training and infrastructure.

When it comes to incentives, Louisiana and Texas are about equal. “But you don’t win a deal based on incentives,” he says. “You win based on things like workforce training, logistics and infrastructure. Incentives only make a difference when everything else is equal.” That’s the sad reality. Little between Texas and Louisiana is equal anymore, least of all workforce training, logistics or infrastructure. Which underscores why it’s important to give control over industrial tax exemptions to local governments. Perhaps if they have more money to devote to education and infrastructure the state will be more competitive in the long run so we don’t have to spend as much time worrying about how to give money away.

Disclosure: LBP Director Jan Moller is a member of the Board of Commerce and Industry, which oversees the ITEP program.


Getting serious on tax reform

Facing a $1.5 billion fiscal cliff, Gov. John Bel Edwards is meeting with groups across the state on tax reform. The governor met with 21 business leaders earlier this month to discuss reforming Louisiana’s Byzantine tax structure and ensure stable revenue collections in the future, with more meetings on the docket. However, JR Ball of the Greater Baton Rouge Business Report writes that the governor still faces an uphill climb and suggests taking a fresh look at recent tax reform studies.

There are a slew of studies and reform proposals currently collecting dust at the state Capitol, including one published earlier this year, so let’s select one and begin the process of turning it into reality. That won’t happen as long as we flatly reject any and all tax increases while also demanding to keep receiving the bounties of our populist past. Business must accept that not every tax credit and exemption is sacred. Those who believe government is bloated must come forward with specific proposals—something those in the House GOP has been unable to do for the past two years. And supporters of big government need to start accepting the notions of fiscal efficiency, performance evaluations and government existing to provide services, not jobs.

On the “government as jobs-provider” front, it’s worth noting that according to the Bureau of Labor Statistics, state and local government jobs are at their lowest point since 2000 in Louisiana. Most state job creation strategies are focused on providing tax breaks to corporations, a tactic that doesn’t align with research on how best to create jobs.


Capital outlay fight

Jefferson Parish President Mike Yenni and Gov. John Bel Edwards traded barbs via letter over a construction project vetoed by the governor. Yenni claims the veto was politically motivated, while Edwards explains that the Legislature gave it the lowest priority classification available and no conversations occurred between his office and the Jefferson Parish delegation. The governor pleaded with policymakers to work with him on creating a sustainable revenue situation for the state in order to fully fund projects like the one highlighted by Yenni. The Advocate’s Rebekah Allen has the story:

“In the future, I would suggest that you encourage your legislative delegation to work with me to stabilize Louisiana’s budget,” Edwards wrote. “Without fiscal reform, current law restricts our ability to finance additional capital outlay projects, and that is the unfortunate reality.”


CBO and its discontents

Established in 1974, the Congressional Budget Office has recently drawn the ire of some Republican policymakers, particularly members of President Donald Trump’s administration (though others, like Sen. Bill Cassidy have at times come to its defense) for consistently concluding that various attempts at health-care “reform” would strip health insurance coverage from tens of millions of Americans. Writing in The New York Times, former U.S. Treasury official Steven Rattner explains that the current level of criticism of the nonpartisan agency is unprecedented.

Amazingly, in July, the White House even put out a 45 second video contending that “the Congressional Budget Office’s math does not add up.” A few days later, two senior Trump aides labeled the C.B.O.’s health care scoring “fake news” in a Washington Post Op-Ed. In 40 years of observing the budgeting process, I can’t recall anything remotely like this criticism of the C.B.O…More recently, a group of conservative House Republicans proposed slashing the C.B.O.’s budget and cutting its staff of 235 by 89 employees.


Number of the Day

$69.6 million2017 property tax revenue lost in East Baton Rouge parish via the Industrial Tax Exemption Program (Source: Together Louisiana)