Tax Break Subsidy Subsidies Government Business

(The Center Square) – Enshrinement of local control over the Industrial Tax Exemption Program into the state constitution has been voted down by Louisiana senators.

The Republican-majority upper chamber of lawmakers on Tuesday voted 21-14 against Senate Bill 151 sponsored by Sen. Rogers Pope, R-Livingston. The legislation aimed to make permanent tweaks to ITEP that Gov. John Bel Edwards implemented through executive order in 2016.

The changes reduce the tax breaks from 100% previously to what’s now 80%, and give local taxing authorities including school boards, sheriff’s offices, and local government councils where the industrial facilities locate the ability to approve or reject the tax exemptions.

SB151 was drafted to enshrine the changes in the state constitution, which requires a two-thirds majority vote in both legislative chambers, as well as approval from a majority of voters. Local officials lauded the changes last month in the Senate Revenue and Fiscal Affairs Committee, where it passed without objection. The GOP has a super-majority, 27-12, in the Senate.

The bill was then debated and amended on the Senate floor to strip out most provisions, but retained the ability of local taxing authorities to approve or reject an industrial tax exemption.

“This is the right thing to do for your people,” Pope said ahead of the vote Tuesday. “This is to me very simple. It’s a local issue, I think the locals need to have a voice in it.”

Pope said the motivation behind the bill was to prevent future administrations from repealing Edwards’ 2016 executive order and reverting full control over ITEP exemptions to the Louisiana Board of Commerce and Industry.

For years, the board was the sole entity responsible for approving or rejecting exemptions of 100%, and virtually all exemptions were approved. Since the changes in 2016, 96% of all ITEP projects have been at least partially approved by local governments, Pope said, while 84% have been fully accepted.

“That’s telling me all of the locals want the business,” he said.

Sen. Robert Mills, R-Minden, spoke in opposition of the bill, citing ITEP’s “many, many decades of very successfully recruiting major industries into Louisiana.”

“I really can’t imagine why we complain about that,” he said. “It’s the heart and the soul of Louisiana.

“I talked with quite a number of economic development groups, quite a number of elected officials that are involved in our government, and we are requesting, begging that we keep this program in place today as it is."

Mills went on, “It’s not so good that I would want to memorialize it in the constitution. Obviously, we’ll have a change of government here in Louisiana in a couple of years and I think we’ll probably want to revisit this, but going into the constitution with a relatively new ITEP program I just think is a bad idea.”

All Senate seats are four-year terms, and all are on the ballot next year.

The vote Tuesday came a day after more than 300 local officials throughout Louisiana signed an open letter to the Legislature in support of SB151.

“For 86 years, Louisiana has been the only state in the nation to grant an unelected, statewide board the authority to exempt industry from paying local property taxes without the approval of local governments,” the letter states. “We ask you to vote in support of Senate Bill 151 to restore our basic right to control our local tax dollars.”

The Louisiana Association of Business and Industry, as well as leading oil and gas associations, applauded lawmakers for voting down the bill.

“We’re heartened to see that the Senate saw this effort for what it was: an attempt to make our state less competitive, lose jobs, and turn away investment and economic growth,” said Stephen Wauespack, the LABI chief executive officer. “Louisiana is staring down a historic opportunity which our southern neighbors are beginning to capitalize on. Jobs are fleeing high-tax states like California and New York and heading south; supply chains are disrupted and coming back home from overseas. ITEP is one of the most critical tools we have in the toolbox to attract those investments, and (Tuesday’s) vote is a step in the right direction to get us back on track and in the game.”