Last week, Republican Gov. Jeff Landry completed the inevitable defeat of baantjies vir boeties, making a bad—but unfortunately necessary—policy less obnoxious while telling special interests and courthouse gangs to go pound sand.
Baantjies vir boeties – “jobs for the boys” – was an expression used in the old Republic of South Africa during the reign of the National Party, up until majority rule came about in 1994. The architects of apartheid pursued this strategy to prevent white support from eroding in favor of moderate or radical competitors who focused on economic class concerns that could distract from their racial politics. They accomplished this through heavy government regulation and spending, ensuring employment in both the public and private sectors. (Many other polities have engaged in similar patronage, but the old South African example was among the most brazen.)
A similar tactic—using government power to reward supporters with jobs and other concessions—was foisted upon Louisiana by former Democratic Gov. John Bel Edwards when he altered the Industrial Tax Exemption Program (ITEP). This program allowed new businesses a partial-to-total break from property taxes for up to a decade. The state’s Board of Commerce and Industry—mostly composed of gubernatorial appointees, with the rest being elected or appointed officials, including a governor’s designee—rules on these exemptions, with the governor holding veto power. In effect, the governor dictates the parameters by which breaks are given.
Edwards used that power to limit the break to 80 percent and split the decade-long benefit into two five-year terms. These changes weakened ITEP —an already inefficient fiscal tool—as a counterbalance to Louisiana’s sky-high property tax rates on everything but primary residences, including inventory taxes.
But the most damaging change was his insistence on giving local taxing entities veto power over exemptions. This allowed them to strike deals–both formal and informal–with petitioners that defeated the purpose of ITEP as an economic development tool. Most grossly, jobs requirements could be demanded out of companies, with some jurisdictions creating a checklist of intricate requirements that prioritized political demands more than they–peripherally if at all–boosted development. Indeed, Edwards would incorporate a jobs requirement into the parameters.
Fortunately, Landry began changing this not long after he succeeded Edwards. He scrapped both the job requirements and local approval mandates, though initially, this applied only to new applicants. Last week, he completed the rollback when his latest executive order dealing with ITEP eliminated retroactive applications of the jobs requirement. Along with that, the order allows on an extraordinary basis the exemption to reach 100 percent for projects of at least a half-billion bucks.
These changes restore ITEP to nearly its pre-Edwards state. Ideally, the program wouldn’t be necessary at all—Louisiana should have a lower homestead exemption and significantly reduced property taxes across parishes. But with no such fiscal reform on the ballot this weekend, ITEP remains to be tolerated. And with this final flourish, Landry delivers a decisive blow to the courthouse gangs and special interests that Edwards used to reward political allies rather than improve Louisiana’s quality of life.
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