One bill would reform tax incentives while another would undo tax incentive reforms

Eunice lawmaker wants to revoke local approval of property tax exemptions

House passes qualified immunity bill
Louisiana legislators convene in the House of Representatives chambers at the State Capitol during the 2020 special session. (Wes Muller/LA Illuminator. Wednesday Sept. 30, 2020)

Louisiana’s House Ways and Means Committee advanced a bill Thursday that would require a two-thirds vote of the legislature to enact any new tax incentives. However, a separate bill that threatens to remove the authority that local governments have over corporate property tax exemptions was proposed and ultimately deferred.

House Bill 202, sponsored by Rep. Stuart Bishop, R-Lafayette, stands to be a critical component of the tax reform agenda being pushed by GOP leaders in the legislature this year. 

Louisiana offers close to 200 various tax exemptions, credits, deductions and other incentives that collectively cost taxpayers $8 billion in lost revenue every year, according to Karen White, executive counsel for the Louisiana Municipal Association.

Bishop’s bill would make it much more difficult for lawmakers to both give and take away tax incentives by requiring the approval of at least 70 of the 105 state representatives and 26 of the 39 senators. 

It took about 15 minutes of discussion before committee members approved the measure without objection.

“This is, I think, good policy,” Rep. Malinda White, D-Bogalusa, said. “It does affect the revenue, and I want to move favorably at the appropriate time.”

The bill would propose a constitutional amendment, requiring passage by two-thirds of the legislature and then approval by voters at a statewide election on Nov. 8, 2022. If it clears all those hurdles, it would take effect on Jan. 1, 2023.  

Later Thursday morning, however, Rep. Phillip DeVillier, R-Eunice, who sits on the committee, proposed a separate bill that would unravel the overwhelmingly supported reforms that were placed on the state’s Industrial Tax Exemption Program (ITEP) five years ago.   

House Bill 318 is a constitutional amendment that would return complete authority of ITEP to the state Board of Commerce and Industry, removing the reforms enacted via executive order by Gov. John Bel Edwards in 2016. That executive order gave local governments the authority to approve or reject any property tax exemptions authorized by the Board of Commerce and also required that companies create jobs with the tax incentives. The reforms further limited exemptions to 80% of a company’s total property tax bill rather than 100%.

Prior to 2016, local taxing entities such as parishes, school boards and sheriffs had no say in whether the state board (comprised of non-elected members) should exempt a company from paying local property taxes — a primary source of revenue for local governments. DeVillier’s bill would largely reinstate that system but would leave the 80% limit intact. 

A related measure placed on the ballot last year was overwhelmingly rejected by Louisiana voters.

DeVillier said he spoke with local leaders across the state who told him they no longer want a say on ITEP contracts: “I’ve heard from many locals who said this is not what they ran for.” He also claimed his bill would save revenues for local governments by codifying Edwards’ executive order before a new governor can come along and undo the reforms.

“I feel like if we can offer our locals this policy long term, it’s something that can truthfully help them,” DeVillier said.

But DeVillier’s bill would not codify the entire executive order because it would not grant local governments the authority to approve or reject the tax exemptions. And the language that would be placed on the ballot for voters would likewise omit that component, stating:

“Do you support an amendment to remove the governor from the industrial tax exemption approval process, set the maximum amount of the exemption for a manufacturing establishment at eighty percent of the ad valorem taxes of the establishment, and set the maximum amount of the exemption for a mega-project at ninety-three percent of the ad valorem taxes of the establishment?”

However, Rep. Jason Hughes, D-New Orleans, asked DeVillier that if his intent is truly to help local governments keep their property tax revenue, then would he accept an amendment to DeVillier’s bill that would ensure local governments keep their authority to approve the tax exemptions. But DeVillier objected to the change and threatened to “park” the bill if the committee amended it, prompting pushback from fellow lawmakers — both Republican and Democrat. 

DeVillier’s Republican colleague, Rep. Buddy Mincey, of Denham Springs, voiced support for Hughes’ amendment, as did other lawmakers on the committee, prompting DeVillier to ultimately defer the bill to a later date. 

Mincey, who got DeVillier to admit to having no experience with local government, said local leaders are accountable for property tax revenue and thus should remain involved in the ITEP process.

“I was a school board member for 13 years,” Mincey said. “Prior to the governor’s executive order, ITEPs would come in my parish…and I didn’t have any involvement. It’s something that just went through, was approved and we didn’t know the difference. But the governor’s executive order, which was the right thing to do, put local involvement in the process.”

Edgar Cage with Together Louisiana, a nonprofit grassroots organization that opposes corporate tax exemptions that divert funding from education, said DeVillier’s bill is dishonest.

“HB 318 is a really underhanded bill,” Cage said. “The ultimate wolf in sheep’s clothing. It pretends to be a reform bill. But what it really would do is to strip local communities of the ability to control the most expensive corporate welfare program in the nation, which is costing Louisiana schools and local services about $1.5 billion every year.” 

DeVillier may propose the bill at a later date.

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