Wednesday, May 16, 2018

Only took two years to get started with this

We've been hearing a lot lately about the negative effects of state level preemption over municipal governing policies. In Louisiana, the state legislature has interfered with the ability of local governments (New Orleans in particular) to establish their own laws regarding all sorts of things including gun control, minimum wage, even zoning regulations.    It's a fundamentally anti-democratic practice and a never ending source of frustration for local elected persons who find themselves effectively blocked from carrying out the will of the people they represent in many cases.

Given the growing controversy over this practice, it is strange that certain local authorities have been slow to take advantage of an opportunity to bypass one of its most damaging manifestations.  In 2016, the Governor signed an executive order that grants local taxing authorities a greater degree of control over the Industrial Tax Exemption
The most significant change in the executive order may be that approval of the tax exemption now requires a resolution of support from local taxing agencies. Also, the order shortens the maximum length of an exemption from 10 years to eight years, and in the final three years, the property tax exemption will be capped at 80 percent rather than 100 percent. Those changes should trim the program's costs by at least 25 percent.
There are complications but, basically, what this means is local school boards and sheriff's departments who have been especially crippled by this massive corporate giveaway now have the power to reject or rescind it.  It wasn't until February of this year, however, that anyone actually exercised this new power. Caddo Parish Sheriff Steve Prator denied an applicant a small exemption  worth $6000 over 8 years. That seems insignificant but it sets a precedent which hasn't gone unnoticed.

Last month, teachers in Baton Rouge began agitating the local government to tighten its leash on the tax exemption.   And this week, the Orleans Parish School Board introduced a resolution by Ben Kleban to impose a three year moratorium on granting the exemption. According to Kleban, here is how the Industrial Tax Exemption affects Orleans Parish schools.
According to Kleban's resolution, the "intent of the Industrial Tax Exemption program is to create jobs and stimulate the economy, recipient companies of industrial tax exemptions in Orleans Parish promised to create over 4,500 jobs since 2000, but the actual change in jobs was a net decline of 76 jobs."

The school system's tax exemptions in 2017 totaled $3 million, which could have been used for education programs, Kleban said Tuesday during the board's finance committee meeting.
Even if we accept the premise that there's ever a justification for diverting tax dollars intended for education over to private sector "job creation," this program fails according to its own metric. The bigger picture is even worse than what Kleban's numbers describe.  In December, Together Louisiana presented findings to the City Council about where that money goes.  All in all they found that the exemptions up for renewal this year had delivered a total loss of 279 jobs. Also there's a breakdown.
Here are  the top six incentive recipients in Orleans Parish, the subsidies they received and the jobs they created as a result of the incentive, according to Together Louisiana.
  • Folger Coffee Co., $105.5 million in subsidies, 121 net jobs created
  • Brookfield District Energy USA, $17.2 million in subsidies, 14 net jobs created
  • Air Products and Chemicals Inc., $16.7 million in subsidies, 24 fewer jobs after the tax break was approved
  • Southern Recycling LLC, $15.6 million, 80 net jobs created
  • Entergy New Orleans, $13.9 million in subsidies, nine fewer jobs
  • Textron Marine & Land Systems, $9.6 million in subsidies, 51 net jobs created
All of which costs the city $10.6 million altogether and the school board, as stated, $3 million.

So Kleban's moratorium seems like a no-brainer, right?  Well the school board isn't so sure just yet. They're gonna wait for the Business Alliance to tell them what to do.
A representative for the New Orleans Business Alliance asked the School Board to defer voting on the measure and to give the group an opportunity to present findings to the group.

The committee chose to forward the resolution to the full board for consideration without a recommendation.

Update: I should have known there would have been a more detailed story about all of this at The Lens.  The full school board is expected to vote on the tax exemption today. 

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