Companies that receive major breaks on their local property taxes to invest in large industrial projects in Louisiana will no longer have to set hiring goals to get the incentive, plus they won’t need approval from local taxing authorities if the governor is in favor of their proposal.   

Gov. Jeff Landry signed an executive order Wednesday that upends the standards and approval process that’s been place for the Industrial Tax Exemption Program (ITEP) since 2016. The signing took place during the governor’s appearance at a Louisiana Association of Business and Industry luncheon, according to the Baton Rouge Business Report

“This program is about capital investment. It is not about job creation,” Landry said.

Since 1998, Louisiana has awarded more than $20 billion in local tax breaks to industry through its Industrial Tax Exemption Program, according to an Ohio River Valley Institute analysis. 

Flow from the ITEP spigot slowed significantly in 2016 then-Gov. John Bel Edwards issued an executive order that required local approval of industrial tax exemptions. He also reduced the tax break available from 100% of property taxes to 80% and inserted a job-creation requirement for companies. Landry’s order keeps the tax reduction at the same level.

The executive order he signed Wednesday also condenses the process for companies to receive local approval on their tax exemptions. Previously, each local body that collects property taxes had to approve tax breaks independently with a separate public hearing. For example, a parish school board could approve the tax exemption, but a parish council or sheriff could reject it. The business would then receive a partial tax break.  

Landry’s new arrangement calls for a single parish industrial board, which would include representatives from the taxing agencies, to consider ITEP applications. Its vote would apply to all local agencies that receive property taxes, meaning companies would get approval a total tax break or none.

The executive order maintains the sequence of approval to award industrial tax exemptions, placing ultimate power in the governor’s hands. Local consideration will continue to follow approval of ITEP requests to the state Board of Commerce and Industry, a 24-member panel of appointees from business groups and the governor. 

If the Board of Commerce and Industry approves an ITEP request, the state panel will then notify the appropriate parish industrial board that it must hold a public hearing on the application within 45 days.

However, the order says little about what weight the local recommendation has in the ITEP approval process or how it factors into the governor’s decision.

“Input from the Local ITEP Committee is important for consideration of an industrial tax exemption; however, it should not unduly delay the ITEP application process,” the order reads.

In an email, the Illuminator asked Landry spokesperson Kate Kelly about the governor’s ability to override a local ITEP vote.

“The governor is the final say,” Kelly said.

Together Louisiana, a coalition of church and civic groups, has been highly critical of the state’s generous ITEP giveaways. In a statement Wednesday, the group questioned whether Landry’s order turned the incentive program into “a gift.”

“If a corporation gets a tax exemption, not to bring in a new plant or create jobs, but just as a public subsidy for its routine capital investments — investments, that is, that would have happened anyway — the result is not economic development. It’s the opposite,” the Together Louisiana statement said. 

“In that scenario, local communities don’t get new economic activity, but they still lose the millions in tax revenue from their schools, roads and police,” the statement continued. “They lose jobs — the teachers, construction workers, sheriff’s deputies and others who would have provided the services that went unfunded. And their property taxes start going up, to fill the holes in the tax base left by each new round of gratuitous giveaway.”

Without any job requirements, companies can now apply for tax exemptions for most any large-scale investment in Louisiana. Landry’s order does specify that maintenance expenses, environmental compliance upgrades and replacement parts that are not part of an extensive restoration do not qualify for ITEP awards.

The order goes into effect for all ITEP applications moving forward, effective Feb. 21, but does not apply retroactively to applications or exemptions.

Correction: This report was updated to reflect the sequence of ITEP approval will remain unchanged under Gov. Landry’s order.

This article first appeared on Louisiana Illuminator and is republished here under a Creative Commons license.

Louisiana Illuminator is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Louisiana Illuminator maintains editorial independence. Contact Editor Greg LaRose for questions: [email protected]. Follow Louisiana Illuminator on Facebook and Twitter.

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Greg LaRose has covered news for more than 30 years in Louisiana. Before coming to the Louisiana Illuminator, he was the chief investigative reporter for WDSU-TV in New Orleans. He previously led the government...