After hearing sharply different opinions over whether industrial tax exemptions are ripping off government or encouraging economic development, Mayor-President Sharon Weston Broome issued an executive order Wednesday creating a committee that will review future applications for the program.
Industrial tax exemptions, or ITEP, have allowed companies including ExxonMobil, Georgia-Pacific and Formosa Plastics to receive some local property tax abatements that amounted a loss of slightly less than $10 million for agencies across Baton Rouge government last year. The faith-based organizing group Together Baton Rouge has called for closer scrutiny in deciding whether to grant such exemptions for corporations already located in Baton Rouge, saying the money could be better used in some cases for schools, public safety and other local needs.
But the Baton Rouge Area Chamber counters that ITEP is an important tool to lure companies to Baton Rouge and to keep them here.
ITEP applications were previously granted at the state level, but local governments now have control over them. The committee that Broome announced Wednesday will have four members representing Baton Rouge’s biggest taxing agencies: the mayor-president’s office, the Metro Council, the East Baton Rouge School Board and the East Baton Rouge Sheriff’s office.
The committee will come up with a matrix that helps to evaluate the merits of an applicant’s pitch for ITEP. But the committee will be strictly limited to making recommendations about granting an exemption. The public bodies the members represent will make the final determinations about whether a corporation should receive an exemption.
The committee will also be bound by open meetings laws and public records laws.
“While the exemptions serve as a business development tool, they also have a large effect on the revenue bases for almost all local services,” Broome said in a statement Wednesday. “With local control comes the responsibility for us to have an orderly process to evaluate the exemption request on a cost benefit basis.”
BRAC recommended the creation of such a committee months ago, saying it was important for Baton Rouge to have a transparent way of deciding how to grant ITEP for the companies applying. Together Baton Rouge worried that a committee would rubber stamp exemptions, and wanted the taxing entities to keep their individual powers to determine whether to grant the exemptions.
Both Together Baton Rouge and BRAC said Wednesday that Broome’s executive order was a good step forward. BRAC billed the news as demonstrating “the parish’s commitment to keeping East Baton Rouge competitive for manufacturing.”
“This positive and proactive approach could be a model for the rest of the region and the state,” BRAC said in a statement Wednesday. “We applaud local leadership for recognizing the importance of manufacturing to our regional economy and demonstrating their commitment to continued growth in the sector.”
The Rev. Lee Wesley, one of Together Baton Rouge’s leaders, said Together Baton Rouge was happy to see that the committee will not have the final decision-making power. Wesley said Together Baton Rouge will be watchful of the committee meetings, and said Together Baton Rouge is not anti-tax exemption, but that the group wants to make sure ITEP results in new jobs for local people.
“The proof is going to be in the metrics that they establish for evaluating these applications,” Wesley said. “We want to make sure the metrics will include job creation, that it sets up a cap on the amount of exemption per job and that the subsidy is tied to the level of hiring from the local community.”