New ITEP rules spark fear locals will lose say in granting tax breaks

(Source: Nick Gremillion - WAFB)

BATON ROUGE, La. (WAFB) - Gov. John Bel Edwards’ administration is amending the rules to the Industrial Tax Exemption Program (ITEP) so that private businesses that are denied tax breaks by local government entities can appeal the decision to the state Board of Commerce and Industry.

Critics say the move is an about-face, again minimizing the say sheriffs, school boards, and metro councils have over the tax dollars they would otherwise collect by allowing a state board to override a local decision.

Companies can now “appeal the rejection of an exemption by a local governing body... upon grounds that the rejection is for reasons in conflict with the ITEP rules, including but not limited to alleging that a local governing body rejecting the exemption has guidelines that contradict the ITEP rules,” according to the new rule.

Through an executive order during his first term, Edwards reined in and changed the program to allow locals some say in the matter for the first time. Sheriffs, school districts, and councils could each decide to collect or forgive their share of the property taxes to be levied on the industry in their area.

Before Edwards’ executive order, the state board had complete authority to grant or deny ITEP tax exemptions. Critics say the Board of Commerce and Industry rarely denied applications, frequently forcing local entities to forgo collecting some property taxes in their area without any vote on the matter.

Now, they say they fear the latest tweak will rob locals of the control they were given after decades of what they call “rubber-stamping” by the state board.

The governor’s office maintains the intent of the amendment is to create uniformity between state and local rules that dictate how or why an application is denied. Matthew Block, the governor’s attorney, stressed to lawmakers Friday the rule does not strip local entities of their say in the process.

Though the state board retained its vote under Edwards’ executive order, it was the first major tweak to the program designed to lure industry to Louisiana since its inception in the 1930′s.

Representatives from Together Louisiana, the ITEP program’s loudest critics, say Friday’s adjustment opens the door for a larger appeals process that would all-but-eliminate local control. The onus would be on the Board of Commerce and Industry to base its appeal rulings on the legality of the rule by which the local entity based its decision to deny.

In January 2019, the East Baton Rouge Parish School Board voted down a tax break for work Exxon had already completed in 2017.

“We were the only state where local governments didn’t have a say in how their tax dollars were collected, and my executive order fixed that," Edwards wrote in a statement after the EBR school board’s 2019 vote. “Louisiana continues to have one of the most generous ITEP exemptions because we know ITEP creates shared value for our manufacturers and our local communities — to grow together, with a certain path for the future.”

The EBR school board handed Exxon a rare defeat, and the company hinted they could locate a proposed expansion outside of East Baton Rouge Parish the following day. The decision sparked a dramatic debate in Baton Rouge that prompted Mayor-President Sharon Weston Broome to hold a public meeting with the city’s business leaders to express their support for ExxonMobil.

That local concern encouraged statewide fear that Exxon and other industry giants could leave Louisiana, taking their jobs and tax contributions with them.

The debate frequently pits K-12 education against the oil & gas industry.

Though some members of the legislature sit on the board, the Board of Commerce and Industry is largely un-elected.

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