Members of Together Louisiana gather outside the Lasalle Building at 617 North 3rd Street, to draw attention to the Board of Commerce and Industry to protest the tax exemptions the group describes as “corporate welfare.” (Photo courtesy Broderick Bagert)
To the disappointment of many residents, the New Orleans City Council on Thursday postponed a vote on controversial tax exemptions for Folgers Coffee Company to give it time to explain why it should be exempt from paying an estimated $5.4 million in back property taxes and roughly $14 million in future taxes over 10 years.
Councilwoman Cyndi Nguyen moved for the last-minute deferral Thursday, marking the second time the council has postponed the issue of approving or rejecting six separate property tax exemption applications for the coffee giant’s plants in New Orleans East. Seeking to reject all six applications, Councilwoman-At-Large Helena Moreno first placed them on the Nov. 17 meeting agenda with resolutions to reject each application “due to the unprecedented financial crisis facing New Orleans, finding that the benefits described in the application are insufficient to outweigh the need for tax revenue,” according to that agenda.
However, the Louisiana Board of Commerce and Industry had approved the Folgers applications just a few days before that meeting, prompting the council to defer the matter for 30 days. The tax exemptions are part of the state’s Industrial Tax Exemption Program (ITEP).
Earlier this week, an Orleans Parish School Board committee rejected the company’s applications.
As a compromise on Thursday, council members voted 4-3 to defer four of the tax exemption applications and voted unanimously to reject two others.
Debate began when Councilwoman Nguyen, who represents District E where the coffee plants are located, argued for another 30-day hold, pointing to confusion over the exact dollar amount Folgers would owe in back taxes if the city rejects the applications. Nguyen referred to a nola.com article that reported on a calculation error that inflated the amount in back taxes. Together New Orleans, an advocacy group that opposes the tax exemptions, revealed Wednesday that it made the calculation error and said the back taxes owed to the city are actually worth about $5.4 million — much less than the $12 million the group had previously reported.
“I just want to make sure that we have time to hear from both sides and put the facts out there so people fully understand what we are dealing with and not have a perception that there’s this pot of money coming,” Nguyen said. “And not only that, but I want to be fair to Folgers as well to make sure they have an opportunity to present on all the applications.”
Moreno argued that the dollar amount is irrelevant because, she said, several of Folgers’ tax exemption applications don’t even meet the city’s criteria, which requires the creation of 15 jobs per application with each job paying a minimum hourly wage of $18. Folgers’ applications are for facilities the company has already built; therefore, the tax exemptions would be a gift rather than an economic incentive, Moreno said.
Folgers is the coffee division of the J. M. Smucker Company.
“The J. M. Smucker Company, a publicly-traded corporation, has never been more profitable than it is now,” Moreno said. “They can’t even create 15 jobs per application at 18 dollars an hour? For a $14 million gift?”
Nguyen said she doesn’t want to grant the tax exemptions but simply wants to have the accurate financial details before denying them.
Council members have been primarily concerned with the tax revenue the city could collect this year by rejecting the tax exemptions. They want to use the $5.4 million to put the furloughed public safety employees back to work.
Councilman Jason Williams argued that the company has had enough time to make its case, and the council needs to show that it supports people over rich corporations at a time when city employees have been furloughed.
“Regardless of how many million it is, it’s a lot of money to go to a corporation,” Williams said.
Nguyen’s late changeup was not well-received by many of the residents watching the meeting from home. Before voting on her amendment to postpone, the council recessed for a short break to allow for the public to submit comments.
Dozens of comments were read aloud. Except for a few submitted by Folgers employees, all the comments were opposed to the tax breaks and opposed to any postponement in rejecting them.
“Please vote ‘No’ now and do not delay this decision,” one comment read.
“Folgers needs to pay its taxes to the city,” another read. “Now is not the time for tax breaks. Business is booming for them. It’s time to pay up.”
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