The Business Report
Baton Rouge officials are expected to create a matrix to evaluate a controversial tax break for manufacturers in the coming weeks, part of the parish’s newfound voice in the 80-year-old Industrial Tax Exemption Program.
Meanwhile, Louisiana Economic Development is gathering input on additional changes to the program. In 2016, Gov. John Bel Edwards altered ITEP to give local governments the power to decide whether to approve the property tax abatements, something the state previously did alone. He also reined in the program. Before, companies could get up to 10 years of full property tax abatements, while the new rules limit projects to eight years and only 80% abatement for renewal periods.
It remains unclear what the new round of changes will look like. LED Assistant Secretary Mandi Mitchell, asked by the committee about the potential changes, said they would likely be “procedural,” and geared toward “easing the process” for local governments.
LED Secretary Don Pierson says in a statement that Edwards’ executive order has been effective in adding local input and achieving accountability, “however, that’s not to say the program in its current configuration is perfect.”
“We are soliciting input about the potential program process improvements that LED hopes to present to Gov. Edwards and the Board (of Commerce and Industry) for consideration,” he says.
Mitchell, in a presentation today to the East Baton Rouge Parish Industrial Tax Exemption Program Review Committee today, offered a lengthy defense of ITEP, which has become a contentious program that critics like Together Baton Rouge say redirects public dollars from schools and infrastructure with little payoff. LED, the Baton Rouge Area Chamber and other business groups have rallied around the program, painting it as a much-needed tool for economic development.
The committee that met today will soon begin analyzing ITEP applications and making recommendations on whether they are worth granting. Mayor Sharon Weston Broome last year created the group, which includes representatives from the Metro Council, school board and sheriff’s office, to serve as an advisory panel.
In its first meeting today, the group selected a chairman and decided to gather input from their respective bodies on what criteria should be included in a matrix for deciding ITEP applications.
Mitchell offered examples of matrices from counties in Texas. Ellis County, for instance, determines how generous of a tax abatement to give a company based on the new market value of the property and the number of jobs created. Montgomery County uses an abatement schedule based on the total added tax value and number of jobs a project will bring.