There is a John Bel Edwards TV spot circulating on the tube across the state at the moment, and it’s claiming, among other things, that Eddie Rispone got $516 million in tax breaks which could have gone to roads and schools and whatever other things Edwards purports would have been well-used by government. The ad contains a number of other claims which are patent falsehoods, but the one about the tax breaks in particular is an abject lie so egregious that all by itself it disqualifies Edwards from serving one more day as governor.
Because, and this is the reality, Edwards knows what he’s saying is an abject lie but he has so little respect for Louisiana’s voters that he believes they’ll let him get away with it, and he knows for a fact that the state’s legacy media will never call him on the lie. It’s either that or, what’s less likely since while Edwards is an incompetent executive he isn’t a moron or an ignoramus, he doesn’t understand the explanation you will hear below.
Because this is very simple. The ad is claiming that Rispone got tax breaks because his company, Industrial Specialty Contractors, worked on construction projects which were incentivized by the state’s Industrial Tax Exemption Program (ITEP).
Here’s why that’s a lie. When you’re a contractor and you bid a private-sector job on a construction project which is scheduled due to incentives provided by the ITEP program, YOU ARE NOT THE ONE GETTING TAX BREAKS.
The one getting the tax breaks is the company claiming them. In other words, when ExxonMobil gets an ITEP incentive to spend a billion dollars upgrading, say, their oil refinery in Baton Rouge, it’s ExxonMobil who gets the ITEP money. Not Eddie Rispone, who may or may not win part of that construction job by submitting a winning bid for his aspect of the work, which for the most part is specifically design and installation of the instrumentation and controls on large industrial facilities.
And it’s the owner of the facility whose construction is being incentivized, like ExxonMobil in our example, who is paying Eddie Rispone. Not the government. The state of Louisiana or East Baton Rouge Parish isn’t spending a dime to construct that upgrade to the oil refinery.
Understand this, because it’s important – NO GOVERNMENT MONEY is spent on these projects. None. Eddie Rispone is getting paid by ExxonMobil in our example. Not the state of Louisiana and not East Baton Rouge Parish. ExxonMobil.
So what is ITEP, then? ITEP works as a setoff against property taxes. Future property taxes. If ExxonMobil’s refinery was worth a billion dollars and they’re spending another billion dollars to upgrade it, then the value of the refinery was obviously going to increase, and ExxonMobil’s property tax bill would increase along with it. ITEP is the state telling ExxonMobil that if they spend that billion dollars they’ll make sure East Baton Rouge Parish doesn’t punish them with giant property tax increases, since it’s good for the regional and state economy to have that money being spent, and the employment coming from both the construction and the plant upgrade after the construction is done will produce lots of tax revenue in its own right.
And the point of ITEP is to get that money spent in the Louisiana economy, as opposed to somewhere else. Because in the case of ExxonMobil, they’ve got lots of options and can spend their investment dollars all over the place – including Texas, where the tax treatment is a whole lot better than it is here. ITEP is an attempt to level the playing field against Louisiana’s atrocious tax code and make this place a little more competitive.
Of course, the first thing John Bel Edwards did when he took office was to gut ITEP by giving local governments veto power over the incentives, which has already resulted in episodes by which entry-level politicians on school boards and parish councils and so forth, who haven’t the first idea about economic development, have exercised that veto. As a result, the people who do site selection for large industrial companies, like ExxonMobil for example, no longer factor ITEP in as having forecastable value – because they don’t know what leftist outfit will show up and turn an ITEP award into a hot potato and buffalo dunce local politicians into voting it down.
Which is why at one point Bobby Jindal, who John Bel Edwards won’t stop slamming as the governor who destroyed the state’s economy, had $175 billion in industrial capital expansion projects in the pipeline, and Edwards is running around bragging that he has $40 billion going. It’s also why Louisiana lost 12,000 construction jobs last year – Jindal’s construction projects, some of which Rispone’s company worked on, are becoming completed and nothing is replacing them because Louisiana isn’t competitive to attract them anymore.
You can write this off and say “Well, it’s just politics and election season is silly season.” You wouldn’t be completely wrong if you said that. But you would be mostly wrong, because what underlies this lie is a fundamental worldview almost precisely akin to the Barack Obama “you didn’t build that” leftism. John Bel Edwards thinks the money is the government’s money, and if Eddie Rispone makes money on construction projects that carry tax incentives it’s the government paying Eddie Rispone.
It’s that mentality which is why he runs around rejoicing about government surpluses that arise from the largest tax increases in the state’s history as though those surpluses are a function of prudent fiscal management – never mind that Louisiana has the worst-performing private economy in America and he’s the only governor in the country who can’t grow jobs in the Trump economy.
And that mentality, more than John Bel Edwards, is what needs to be banished from the state capitol if we are to have any chance of moving Louisiana off the bottom of the economic and public policy rankings. Edwards’ ad says that Rispone has no business being governor, but the precise opposite is true and Edwards has proven it with his four-year record, not just his thoroughly mendacious TV ad.