BATON ROUGE - class="p1">Today, Governor John Bel Edwards announced changes in Louisiana’s Industrial Tax Exemption Program (ITEP) through an executive order that accomplishes two important aims for the first time: Local governing bodies will have a seat at the table when decisions are made about local property tax exemptions, and companies applying for those exemptions must demonstrate job creation or job retention – or both – in order to merit industrial tax exemptions.
ITEP has remained virtually unchanged since 1974. To date, manufacturers who made eligible capital expenditures in buildings and equipment could earn a 100 percent exemption on local property taxes for up to 10 years. The Louisiana Constitution empowers the governor to approve ITEP contracts in a manner consistent with the best interest of the state.
Beginning today, Louisiana Economic Development (LED) will create Cooperative Endeavor Agreements for each ITEP application, with local governments (parish governing bodies, municipal governing bodies, school boards, and sheriffs) providing input on the percentage of tax exemption to be granted, based upon the attractiveness and economic impact of each project. Each manufacturer applying for the exemption also must agree to create new jobs beyond existing employment, retain existing jobs, or both.
“Today, the Industrial Tax Exemption in Louisiana costs more than the homestead exemption. This action is about setting that proper balance to benefit everyone in our state. We have studied the merits of this program long and hard, and we fully understand its vital importance for stimulating manufacturing investment in Louisiana,” Gov. Edwards said. “What stood out to us is that local governments did not have a voice or a seat at the table – even as decisions were being made about the exemption of property taxes in their own jurisdictions. My executive order corrects that inequity while also requiring ITEP applicants to demonstrate that at a minimum they will retain existing jobs and that ideally they will create net new jobs.
“To our manufacturing employers, let me say that we recognize the value of what you bring to our state through your production, investment and workforce. These changes in no way diminish the importance of your contributions. We are simply aligning the Industrial Tax Exemption Program with the best practices of other states and with the best interest of our residents and the local governments they support. By involving all of our stakeholders – company taxpayers, individual taxpayers and taxing jurisdictions – we are setting the stage for a fair and fruitful partnership in incentivizing industrial growth throughout Louisiana.
“Today’s action is about setting that proper balance to benefit everyone in our state. Let me also clarify that these changes to the ITEP program are not related to the fiscal challenges of our recent legislative sessions. The tax implications of ITEP are felt at the local level rather than the state level, and, while a part of my plan to stabilize our state and local government budgets long-term, the signing of this executive order the day after the conclusion of this year’s second special session is merely a coincidence.”
“Today’s action by Governor Edwards is a blueprint for creating a better Louisiana for everyone and secures a bond between our state and local governments, the people of Louisiana and our valued manufacturing partners,” LED Secretary Don Pierson said. “We’re pledging to taxpayers that the Office of the Governor, LED and the Board of Commerce & Industry will do our absolute best to ensure we attract manufacturing investments that not only are good for our economy, but also are good for our local governments, schools and other taxing jurisdictions, including law enforcement, libraries, fire protection, and water and drainage districts.