It turns out that the corporation that landed millions of dollars in state incentives to run a call center in a state-owned building now has all of 10 employees using it. At this time last year, Accent Marketing announced it would lay off almost all its employees at its Monroe headquarters, at the high-profile former State Farm building. State Farm, when it left the area, donated the building in 2004 to a quasi-public entity known as the Ouachita Economic Development Corporation.
This group, funded by local governments and business, in turn donated it to a private entity run by people connected to it until in 2007 it sold it to the state for $3.25 million. During that time, the entity collected almost a million dollars more from the state for various activities.
Already in over $4 million, former Gov. Kathleen Blanco had the decent idea of razing it and building a new Delta Community College campus into it. But then the huckster Michael Olivier, then her secretary of Economic Development, sang the siren song that those of his ilk use to justify their enormous salaries on taxpayers’ backs, to use it as an incentive with generous state subsidies to lure a private concern there. Half a year later, Accent Marketing showed up and for part of its now 42-month presence employed more than its promised 400 jobs to qualify for as much as $3.2 million in state subsidies on rent. Henceforth it must pay market rates for rent and claims it will stay; for that loss of money, we’ll see how long that lasts and soon the state will have an empty hulk on its hands again.
That deal now down the tubes puts more egg on the face of Olivier’s successor and fellow true-believer, Stephen Moret, after the failure of another state attempt to act venture capitalist regarding another closed Monroe concern and the enticing of an economically-viable outfit with the failure of the V-Vehicle corporation to come up with a business plan that could even get government funding. Moret now must ask for money back, as he got from V-Vehicle, and acknowledge a second high-priced failure.
This incident continues to demonstrate the stupidity of this strategy. Why does state government continue to throw good money after bad for this building that it should not even own? Tricks like credits and subsidies to entice job relocation are like cheap makeup to cover warts. To make business love the state, the state’s business environment itself must be lovely. That comes through lower taxes, reduced regulation, increased trust in government, and greater confidence in the capabilities of the workforce. It does not come by dangling incentives to hide shortcomings in these other areas because if going concerns could survive without state help, they would have been there without it.
Gov. Bobby Jindal, if haltingly, has advocated and implemented sound, conservative economic policies in his three years – tax cuts and then their preservation, mild reductions in state spending not forced by the state’s constitutional or federal money, consequential reforms that strengthened ethics in government, and tinkering with the operations of state government to improve efficiency. But he has an extraordinary blind spot regarding the bribery strategy of the likes of Moret who, like his predecessors and certain legislators who agitate for these kinds of projects, has been as useful to economic development and has done as much good for the state as a high-priced hotel bellhop. Like Moret, they get paid to rub shoulders with the powerful in the world of business, but at least not with taxpayer dollars that could be allocated in far more effective ways such as building infrastructure, reducing the state’s unfunded accrued pension liability, and the like instead of used as corporate welfare.
What Jindal has been doing in these other ways is what attracts business – and if he’d do more of them the effect only would magnify. In the near future, the payoff would come with increased state tax revenues. Paying filmmakers, chicken processors, and call centers to locate here only costs the state more than it receives in benefits and skews, if not retards, economic development. Jindal needs to concentrate on first principles and reject the entreaties of charlatans like Moret which logically end like the pair of failures in Monroe.
Louisiana has the most generous exemption in the nation, on a primary residence of what turns out as the first $75,000 in value on property taxes except for municipalities except in Orleans Parish. Other exceptions exist such as disability and veteran status and may apply to any jurisdiction (such as established by Amendment 3 from the last election). Proponents of the high rate, including those who wish it to go higher, argue it helps those on fixed and/or limited incomes afford home ownership. Opponents of any higher rate, including those who would want it reduced, assert that this shifts the major part of the tax burden onto those owning more expensive homes, business and renters, city residents, and shortchanges jurisdictions other than municipalities (except in Orleans Parish).
This extant rate last changed in 1982, providing fuel to those who wish to raise it. This prompted the likes of former Jefferson Parish assessor Lawrence Chehardy and current state Sen. John Alario to consistently agitate for its increase in the past couple of decades. But its high level means, even with consumer inflation worked in from it latest compuation in Nov., 2010, that today’s equivalent has sunk only to $32,324, well above many states such as neighboring Texas with its $10,000 exemption.
Given that the most efficient form of taxation in terms of revenue collection comes in the form of the lowest aggregate rate spread over the largest pool of payers, state Rep. Kevin Pearson has suggested through legislation in the past two sessions the excellent idea that owners pay on the first $10,000 (meaning practically every homeowner) and then the exemption applies in the $10,000.01 to $85,000 range. Under this arrangement, even the most strapped owners would pay a pittance; as an example in a jurisdiction where the combined millage equals 100 this would be a bill of $100 for the year.
Advantageously, it would achieve the optimal by spreading the burden and increasing revenues by bringing more payers into the system. After implementation, it might also create slower increases in tax rates as a broader range of voters would be affected by these, thereby making them less likely to vote for them, and it would make governing authorities less likely to allow millage levels to remain the same as property values increase, as more constituents would be affected and might disapprove. As Pearson’s past efforts have been rebuffed, hopefully he’ll try again this session.
Another reform attempt, indexation, should not be implemented. Not only would it lock in the artificially high level in Louisiana, it would not address the ability of authorities to roll forward millages as noted above. That is, they may become more likely to vote to allow the millage to go higher, above the level where, applied to reassessed values, the same total collections would remain the same for those properties not transferred in ownership, as a way to beat indexing.
Finally, while the best theoretical idea would be to have no exemptions written into the law or Constitution and instead to allow assessors to make case-by-case exemptions on the basis of numerous factors like income, disability, age, veteran status, etc., that assessors are elected officials threatens too much to bring political considerations into play. Thus, Pearson’s idea without indexing has the best chance for enactment that is fair and improves efficiency.
As for the level of the exemption, its relatively high level warrants no increase for some time, perhaps decades. With ardor for its argumentation cooled, perhaps more attention will shift to Pearson’s better solution.