A Step Backward in the Bayou State

Oil companies and other corporations win out over Louisiana communities, again

In 2016, Louisiana Democratic Gov. John Bel Edwards did a good thing: He initiated a change to his state’s main corporate tax incentive program — the Industrial Tax Exemption Program, or ITEP — that gave local governments, including school boards, the ability to weigh in on corporate tax giveaways that affected them.

Since Louisiana is one of the most prolific users of corporate incentives in the country, this was no small deal, especially for school districts that kept seeing property tax breaks suck money out of their classrooms. The change allowed teachers and activists in Baton Rouge to put the kibosh on some tax breaks for Exxon last year, as I covered here, and limited the length and term of ITEP agreements.

That Exxon episode and other votes of no thanks by local bodies caused enough of a stir that Bel Edwards recently endorsed a step backward: Now, corporations that have their tax incentive requests rejected can appeal to the state Board of Commerce and Industry, which is a mostly unelected, corporate-friendly entity that caused many of the problems the 2016 reform was supposed to address by throwing giveaways around willy-nilly.

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Proponents of this change are characterizing it as a simple, technical fix, to harmonize rules and clear up “chaos and confusion.” But when you hear corporate interests talk about confusing, conflicting standards, they’re usually talking about stuff that protects taxpayers.

For instance, two of the complaints levied against local governments was that they were against granting tax breaks for projects that were already started, or even completed, by the time an incentive request came in, and that they were imposing more stringent job requirements on projects than was the state board.

Both of those are totally reasonable things for a local government to do. In fact, backers of this change who argue that already completed developments need to be able to apply for tax incentives clearly struggle with the definition of the word “incentive.”

But instead of having to explain themselves to local governments and voters, corporations can now run back to the state board and cry foul when they don’t get what they want. According to The Advocate, the language of the new rule “is fairly open-ended” in terms of which local decisions can be appealed, potentially setting state-level standards as a sort of ceiling that localities will have a hard time getting around.

“It sounds like local municipalities have a voice — unless the industry disagrees with their voice, and then they get to bring it back to you,” Shawn Anglim, an opponent to the change, told the Board of Commerce and Industry, according to WAFB. And business interests want even more changes in their favor.

This is all a shame. Other states, though, could and should implement the same idea Bel Edwards initially put in place. It’s an easy way to inject some local accountability into often unaccountable programs.

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FYI: As readers of this newsletter hopefully known, tax breaks for data centers are for suckers. They’re even worse when paired with deep discounts for energy, which Google in particular has pushed for, as this excellent BusinessWeek piece details.


One last thing: Happy Super Tuesday! If your state has an election today, go vote.


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Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle, go here. Thanks again!

— Pat Garofalo