State board approves significant change to ITEP rules

Gov. John Bel Edwards (Bill Feig/The Advocate via The Associated Press, Pool)

The Louisiana Board of Commerce and Industry has approved a significant change to the state’s Industrial Tax Exemption Program that will allow a manufacturer to appeal to the board when a local government has rejected its request for a tax abatement under ITEP.

Gov. John Bel Edwards’ administration, which pushed for the change, says the measure does not undo the intent of the governor’s 2016 executive order, which gives local governments more control over awarding the lucrative tax breaks to manufacturers in their parish.

Edwards’ executive counsel Matthew Block says the change is only intended to clarify situations where a specific rejection is based on local government rules that conflict with state regulations.

“This in no way changes the ability of a local entity to say yes or no on any ITEP application,” Block says. “This brings clarity to what the local decisions are. It should not be based on local rules that are in conflict with this board’s rules.”

(Disclosure: Manny Fajardo, a member of the state Board of Commerce and Industry, is an employee of Louisiana Business Inc., parent company of 10/12 Industry Report.) 

In response to the decision, Edwards released a statement lauding the action and saying that it “simply clarifies” rules in the ITEP program so that local denials are in accordance with state program rules, but does not take away the ability of local leaders to make decisions about tax credits. Edwards also adds that he doesn’t anticipate the state having to entertain such an appeal at all.

But opponents of the measure, namely representatives of the grassroots group Together Louisiana, describe the change as a “move backward” that takes authority away from the local governments, just as the ITEP reforms from 2016 are beginning to take root.

“Currently, this board approves almost every ITEP application before this body,” says Edgard Cage of Together Louisiana, which has advocated for reforming the program since 2016. “You’re being asked to give yourself the authority to act again if a local entity does not approve the action of this board.”

Several economic development groups, including BRAC and GNO Inc., spoke in favor of the change, which passed 17-3.

In another key victory for industry, the board upheld an ITEP abatement request for Nalco Cos., a manufacturer in St. John the Baptist Parish.

The parish council voted in late November to reject the company’s request for the tax break, which the BC&I had previously approved, citing the need for the revenues in the cash-strapped parish. The tax break equals about $1 million a year.

But the council’s rejection was deemed invalid because of a clerical error—specifically, the parish failed to officially notify the state of its decision within three days, as required by law.

Parish leaders, who appeared before the board today, say they sent the letter but it apparently got lost in the mail.

Several parish and community leaders implored the board to respect the wishes of the local government and the people it represents.

But the board granted the abatement request, saying the rules have been applied to other local governments and have to be followed.