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Louisiana Exemption Process Creates Confusion

by Tony Klein, Houston, September 2017

 

Last year, Louisiana Governor John Bel Edwards issued an executive order that ties property tax breaks for manufacturing companies to job creation. It also gives local tax authorities the opportunity to approve or deny these tax exemptions. Critics say the new process has caused widespread confusion for everyone involved.

 

New Restrictions

 

For the past 70 years, manufacturing companies have been virtually assured of getting lucrative property tax breaks in Louisiana.

 

Through Louisiana's Industrial Tax Exemption Program, new and expanding manufacturing facilities were allowed an exemption from paying local property taxes for up to 10 years with an initial five-year period and a five-year renewal.

 

Last October, the governor limited the five-year renewal period to an 80% exemption for three years.

 

A Cumbersome Program

 

It's up to local agencies to decide how they handle granting the exemptions. The three agencies most affected by the loss of property tax revenue are:

 

1.

 

Local school boards

2.

 

Police

3.

 

Parish sheriffs

 

Problems arise when the taxing districts don't agree. For example, the police jury could vote for a 100% tax exemption, the school board a 25% exemption, and the sheriff, an 80% exemption. The governor and the Board of Commerce and Industry must also sign off.

 

Officials agree that a simple, predictable and transparent system is needed for making tax exemption decisions. This is especially true for new manufacturing companies that are comparing development incentives in different states.

 

"Parishes are confused about the approval process and businesses are confused about what the process is going to be," explained Stephen Waguespack, president of the Louisiana Association of Business and Industry. "If we sit in this purgatory, how many of these big projects are we going to lose?"