Within a year of assuming office, Democrat Gov. John Bel Edwards issued
an executive
order regarding the Industrial Tax Exemption Program. The law it addressed allows
the governor to cancel local property taxes entirely for up to 10 years.
Edwards changed that, saying he would allow only
five years’ worth at 100 percent and three more at 80 percent. Further, he
would allow local government input that could make those numbers even less
advantageous.
This set off a flurry of activity by those agencies to devise ways of implementing this newly-found power. East Baton Rouge Parish has provided one of the most high-profile, with formation of a committee to create a uniform rubric for affected agencies (although not including the school systems of Baker, Central, and Zachary). Almost two years after the fact, it still hasn’t come up with a methodology, with various competing plans up for consideration. Tomorrow, it may decide on one.
The order’s promulgation created a specter where
local governments and the special interests that supported their governing
majorities would use this leverage to promote their agendas, particularly in
spending more money. This effect has engulfed Baton Rouge and only has grown.
Together
Baton Rouge, an affiliate of the far-left Industrial Areas Foundation
founded by Saul Alinsky, has stumped early and often for the most restrictive
rules that could grow government coffers significantly. The Louisiana
Association of Educators teacher union also
has joined the fray, declaring a similar position. Keep in mind the public
will pay whatever extra tax dollars would get collected, through higher prices
passed along by the entities involved.
Louisiana’s propensity for shoveling most of its property
tax burden onto the entities that would qualify for ITEP makes them particularly
sensitive to uncertainty surrounding the program. Earlier this year, Exxon
Mobil decided to expand
its Beaumont, TX facility rather than Baton Rouge’s, and it’s hard to imagine
that the uncertainty surrounding ITEP didn’t play a role in that. The company
says it still might do so in Baton Rouge, but that the situation
remains the same and it finds this troubling, which suggests a continuing
disincentive.
Had Edwards stopped at imposing his rules without
local government input, even this could be defended intellectually: companies
would know exactly how they qualify and be able to compute whether additional spending
would be cost effective. But if every single application becomes a matter of
judgment by local politicians, potential investors only can fear worst case
outcomes and this will serve as a powerful disincentive to them.
Thus, whatever East Baton Rouge and other
jurisdictions puts together must leave no discretion. And whatever they do,
they must recognize that potential adverse consequences, both in terms of investments
forgone and additional money lifted from people’s pocketbooks, of the standards
they formulate, and consider that in their decision-making. Until the convoluted
property tax regime changes or Edwards’ successor repeals the order, that’s
the best that can be expected.
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