Parishes will lose tax revenue, but employment is expected to increase
The Louisiana House Ways and Means Committee gave its stamp of approval Tuesday to Gov. Bobby Jindal's proposals to expand the local property tax exemption program to non-manufacturing industries. Without objection, the committee approved House Bill 674, sponsored by Rep. Joel Robideaux, R-Lafayette, which proposes a change in the state Constitution that authorizes local property tax exemptions for specific businesses that locate to an area with the approval of parish government.
Rep. Joel Robideaux, R-LafayetteThe committee also approved House Bill 694, which lays out how the new program will operate.
The two bills now go to the House floor for debate. The proposed change in the state Constitution will need a two-thirds vote of the Legislature, then must be submitted to voters at the Nov. 6 election. If approved in the election, it would take effect Jan. 1.
For years, the state has had a five-year property tax exemption -- with a five-year renewal -- in place for industry, such as oil and chemical refineries and manufacturing plants which locate to the state or expand existing facilities in the area.
The Jindal package would expand the benefits to non-manufacturing interests, such as businesses that locate corporate headquarters in the state or facilities such as data centers, research and development operations, warehousing facilities, digital media and software and others.
Stephen Moret, Jindal's secretary of the Department of Economic Development, said the administration met with the Louisiana Municipal Association and the Police Jury Association of Louisiana, the groups who represent local governments, to work out problems they had with the original version.
Officials of the two groups testified in favor of the Robideaux's legislation.
John Gallagher, an attorney for the LMA, said that although parishes will be losing tax revenues by expanding the five-to 10-year industrial tax breaks, "the benefits outweigh the concerns" by increasing employment in an area.
Roland Dartez, president of the policy jury association, said that the parishes have to vote to waive the taxes on a project-by-project basis. That means if a parish wants to help entice a data center but doesn't want to give tax breaks to a corporate headquarters, it can refuse to do so.
Moret said that the legislation requires parishes to "opt in" to the program to waive the parish and local taxes. It also can vote to "opt out" later but must honor the commitment to the tax breaks granted.
Parish government also can vote to waive taxes for individual projects proposed and not for others.
Moret said Robideaux's House Bill 694 requires the new project or expansion of an existing project to "entail a capital expenditure within Louisiana of at least $25 million."
Robideaux said the bill wouldn't apply to business primarily engaged in retail sales, real estate, professional services, natural resources extraction or exploration, financial services or venture capital funds.
Although the bill contained language originally banning the use of the tax breaks for the gambling industry, Robideaux amended it to make the gambling ban clearer: "No business engaged in gaming or gambling shall be eligible for the program."
Jindal spokesman Kyle Plotkin said that if a parish decides not to participate in the tax breaks, its refusal would not kill a project but could make the site less attractive to the business since property taxes would have to be paid.
"This will help us generate many more jobs in Louisiana," Moret said. "This will attract things to Louisiana we are not getting today."
Moret said that the parishes and cities wouldn't be losing tax revenues since the most of the projects wouldn't come at all without the tax break.
"These are projects that 99 times out of 100 would not happen," he said.