exxon 2

The realm of discussion by February often turns toward talk of the upcoming state legislative session and what may loom from what traditionally figures as the most heated topic during the two months at the State Capitol.   

The budget has traditionally sparked the most heated debates during much of the past 10 years.

The talk of the state spending plan will obviously bring some long and spirited discussions to the floor, but perhaps not as much this year.

A projected surplus may play a small role, although the election year may serve as the primary reason. A vote for new taxes does not win votes for an incumbent, and cuts to education and other programs do not attract supporters, either.

The Industrial Tax Exemption Program (ITEP), however, could bring forth a heated battle during the session, which begins April 8 and ends June 6.

Proponents want to undo issues of the executive order Gov. John Bel Edwards imposed in 2016, including the elimination of the local input for approval of the exemptions.

It’s not a Republican vs. Democrat battle on this stage. Instead, it’s the small cities and towns versus the large metropolitan areas.

Some ITEP proponents believe the elimination of the local input from the equation would simplify a program which has fallen under criticism from some lawmakers, along with Stephen Waguespack, president of the Louisiana Association of Business and Industry.

Waguespack never said he wanted an outright elimination of locals from the bargaining table, but he said he believes Louisiana needs to embrace a simpler process on the local level.

The current protocol includes the initial go-ahead from the state level, followed by approval from the local level on three or four governmental entities – the parish council (or police jury), the school board and the sheriff’s office. ITEP requests within city limits must also receive approval from the municipal government.

It’s a cumbersome process to pitch the proposal before three or four entities, in hopes it can go back to the state for final approval. Waguespack has touted the format in Texas – the state’s biggest rival for manufacturing jobs.

In the Lone Star State, the process goes through one board, a “one-stop shop,” as Waguespack describes it.

They can find information on the exemptions online in what many corporations consider a simpler way of landing the credits.

Texas sales and use tax exempts tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a manufactured product to make it more marketable.

The exemption also applies to tangible personal property that makes a chemical or physical change in the product being manufactured and is necessary and essential in the manufacturing process.

A simpler process may help, but the real bone of contention exists on the final decision and what direction they want to take on the program after the East Baton Rouge Parish School Board denied a $2 million request from ExxonMobil.

Proponents believe a consistent program on a level playing field with other states would stave off what they considered a bad image when EBR gave the thumbs down to ExxonMobil.

Meanwhile, those who believe the state has awarded too many exemption packages believe the money would be better spent in another area.

The disputes will lead to a debate over what better serves a community: the tax breaks that keep an industry in a community or denying the exemptions in favor of supporting local public entities, such as a school system.

A corporate entity will look out for its best interest and ultimately go where it can get the most bang for the buck.

Those that receive the benefits often put back in the community, much in the guise as this writer can remember as a resident from Plaquemine, when Dow Chemical helped pay for parks and recreation programs, as well as other quality-of-life programs.

Most importantly, the presence of the industrial sector brings a significant amount of revenue through property and sales taxes, along with the support businesses that go with it.

In that guise, the loss of the entities that bring jobs and revenue to the state will ultimately bring the discussion right back to what happens most years in legislative session – heated fights about a lack of revenue.

Don’t let the lack of a budget argument mislead you.

The discussion on ITEP in the upcoming session will play a huge role in the state’s fiscal direction, not only for the upcoming year, but many more thereafter.

Recommended for you

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.