Yesterday, Governor John Bel Edwards issued an executive order changing the industrial tax exemption program. Previously the state government granted 100% property tax exemptions on new buildings and equipment for up to 10 years. All the business had to was apply to the Board of Commerce and Industry.
Now, JBE is going to require businesses to post advance notification of the application.
Only contracts accompanied by advance notifications will be considered by the Governor. Applications for miscellaneous capital additions and applications for tax exemptions for maintenance capital, required environmental capital upgrades, and new replacements for existing machinery will not be approved or issued contracts by the Governor.
He will also require businesses to prove that new jobs will be created before exemptions are granted.
All contracts providing for the Industrial Tax Exemption shall include Exhibit “A” consisting of a Cooperative Endeavor Agreement between the State of Louisiana, the Louisiana Department of Economic Development, and the Applicant providing for the creation or retention of jobs and provisions for the exercise of the options in the Louisiana Constitution for the term or percentage of the exemption granted in the contract, and for the reduction or loss of the exemption based upon the applicant’s compliance with the contract, provided with respect to the manufacturing project for which the exemption is granted will be approved by the Governor.
Finally, JBE took care of his base too. The courthouse mob will have an opportunity to
shake down businesses make their voice heard before a tax exemption is granted.
All Contracts providing for the Industrial Tax exemption shall also include Exhibit “B” consisting of approvals of the relevant governing Parish Council or Police Jury by resolution, Municipal Council by resolution, School Board by resolution and Sheriff by resolution signifying whether each of those authorities is in favor of the project. The Secretary of Economic Development will provide guidance to the local parties to Exhibit “B” as to the suggested alternatives for their consideration including parameters for job creation, payroll, percentages of exemption, and length of contract.
LABI is crying foul.
However,[LABI President Stephen] Waguespack says the moves, which come on the heels of a recession and three changes to the tax code in 12 months, put the state into “uncharted waters” because businesses are unsure how the new application process will work and if that new process will affect how economic development packages are crafted.
“I think most of the calls (we’re receiving) right now are about the uncertainty it creates,” Waguespack says.
He adds the program is essential for the state to compete with Texas and other countries for massive industrial and manufacturing projects.
Waguespack is also right that the time to address this program is in 2017 Legislative “fiscal” session. This is not something that should be done via executive order.
This executive order should also prove once and for all that there is nothing pro-business or pro-free market about John Bel Edwards. This program is in place because property taxes fall very disproportionately on the backs of business in this state. The reason is because of our obscenely high residential homestead exemption of $75,000.
The commenters on Tiger Droppings also picked up the most obvious explanation for this. It is a shakedown opportunity local governments. If you’re a big business and you want your tax breaks, just buy off the parish government and sheriff. Just like the “good ol’ days.”
The courthouse mob were among the earliest supporters of John Bel Edwards. Now he’s rewarding them with graft opportunities.
Do we really want to go back to those bad old days?