Matt Watson proposes compromise on ITEP guidelines in advance of Monday meeting

The Business Report

Metro Councilman Matt Watson has proposed a set of criteria to evaluate applications for property tax abatements under the state Industrial Tax Exemption Program that he says strikes a balance between a more generous set of guidelines proposed by the Baton Rouge Area Chamber and more stringent ones put forth by the community organization Together Baton Rouge.

Watson is a member of the committee trying to establish clear guidelines taxing authorities in East Baton Rouge Parish can use in evaluating whether to grant the incentive. Watson says he and fellow committee member Mike Gaudet drafted the guidelines—or matrix—because it’s time for the committee to move forward and make some decisions.

“We’ve sat on our hands for long enough,” he says. “We meet, then take a break for two weeks, then meet again, and I thought I would have a shot at grabbing the wheel of the bus and getting us somewhere.”

The ITEP issue has been a thorn in the side of industry since Gov. John Bel Edwards signed an executive order in 2016 giving local governments greater authority over the incentive program, essentially upending the state’s 80-year-old system of rubber stamping applications for the tax break.

For East Baton Rouge Parish, coming up with a system to administer its newfound authority has especially taken on a sense of urgency as late, as ExxonMobil has suggested its decision on whether to do a major capital expansion project at its local chemical plant depends on what kind of tax break the parish is willing to give it.

Watson’s proposed matrix is more like BRAC’s than Together Baton Rouge’s, in that it would grant a full exemption to eligible large companies for the first five years after the investment, and an 80% exemption in years 6 to 8. Significantly, it would not require those investments be tied to new job creation.

For those reasons, Together Baton Rouge lead organizer Broderick Bagert calls the proposal a nonstarter.

“This is the BRAC proposal with lipstick on it, and not even that much lipstick,” says Bagert, whose research into ITEP and the amount of money local governments were missing out on under the old system led to Edward’s executive order.

But Watson says his proposal is tougher than BRAC’s in that it gives more generous abatements to companies that are new to an area and also to manufacturers that make environmentally friendly capital improvements that are not court ordered or EPA mandated.

Also under Watson’s proposal, routine plant maintenance like turnarounds would not be eligible for ITEP tax breaks.

“I think I’ve addressed the vast majority of concerns of both BRAC and TBR to really come to something in the middle to move us forward,” he says.

BRAC President and CEO Adam Knapp says the chamber is encouraged by the proposal.

“While it differs from our proposal in some significant ways, we welcome the fact that the committee is working together toward compromise, which is essential,” Knapp says.

The committee meets at 10:30 a.m. Monday at City Hall to take up the issue. Several committee members say they expect to vote on a final set of criteria. Still, the Metro Council, sheriff’s office and school board all have to approve the criteria before it is implemented.

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