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Manufacturing companies might see a new payment in lieu of taxes (PILOT) option in Louisiana, pending the results of the Amendment 5 vote next week.
Voters will have the choice to approve or reject a potential amendment to the state constitution that would allow local governments the option to negotiate an alternative to ad valorem taxes. This alternative would be for manufacturing companies looking to build new facilities or expand old ones.
However, manufacturing companies already have a tax exemption option in Louisiana. Manufacturing companies can already apply to be a part of the Industrial Tax Exemption Program (ITEP).
According to the PAR Guide to the 2020 Constitutional Amendments, businesses taking advantage of ITEP will be exempt from 80% of their property taxes for up to eight years. When the ITEP deal ends after eight years at the most, the manufacturer will need to pay the property taxes they owe. In addition the government will own the property and lease it to the manufacturer during the exemption period.
Amendment 5 will allow manufacturing companies to enter into PILOT agreements with local governments, rather than the state, where they will be free to offer manufacturers tax exemptions in exchange for scheduled payments to local taxing authorities, according to the PAR Guide to the 2020 Constitutional Amendments. The exact details of these arrangements will be negotiated by the manufacturer and the local government.
The manufacturer can also maintain ownership of the property, unlike in an ITEP agreement.
This will give local governments money faster than they would waiting for an ITEP agreement to expire but could result in less money for the local government bodies in the long run. These agreements can last up to 25 years, 15 years longer than ITEP agreements, according to the PAR Guide to the 2020 Constitutional Amendments.
In an interview with KPLC, a Lake Charles news outlet, Louisiana Senator Mark Abraham, the author of the proposed amendment, said manufacturing companies that take advantage of this new PILOT option won’t be exempted from taxes entirely.
“They are acting like the industry, if they give money upfront and that the payment in lieu of taxes means the industry will never pay any taxes. That’s not correct. This just means that the industry will have a reduction in taxes, after their tax exemption runs out, in exchange for some dollars upfront,” Abraham said.
Abraham said the bill will help local communities build infrastructure faster, as they wouldn’t need to wait for ITEP agreements to expire before they can start collecting more than just 20% of the manufacturer’s property taxes.
According to Ballotpedia, the Louisiana School Board Association, the Louisiana Sheriff’s Association and the Police Jury Association all support the amendment. None of these organizations responded for comment.
However, many Louisiana citizens are opposed to the bill as they fear local governments will be too generous in their negotiations.
“I call it the let’s make a deal bill,” Lafayette Tax Assessor Conrad Comeaux said.
Comeaux said manufacturers will pit different parishes against each other until one of them offers a highly compelling deal that doesn’t give the community enough money to work with in the long run.
“Let’s say you have a business. You want to locate it somewhere. So you go to Lafayette Parish and Lafayette says, ‘Well ok, I’ll give you a 75% discount.’ Well, David says, ‘Well, I’ll see what else I can do.’ David goes to Iberia Parish, tells Iberia parish, ‘Well, Lafayette is going to give me 75 what are you going to give me?’ ‘We’ll give you 85.’ David says, ‘Well, wait a minute, they’re going to give me 85. What’s St. Martin gonna give me? Hell, St. Martin will give me a 95% discount. Well shoot, what’s Vermilion gonna give me? Hell, they’ll give me a 100% discount,’” Comeaux said.
RISE St. James, Louisiana Bucket Brigade, Healthy Gulf, Sunrise Movement New Orleans and the Center for Biological Diversity organized a protest against Amendment 5 on Saturday, Oct. 17 in Lutcher. According to Delia Creamer, an ocean campaigner for the Center for Biological Diversity, about 100 people attended the march.
Creamer said she thinks Amendment 5 will give big polluters a tax break at the expense of the average citizen, and further pollute areas already suffering from pollution.
“I think that the same communities that already suffer from industrial pollution are going to be the same communities, mostly along the Mississippi River, where corporations will try to come in and pay even less property taxes than they already do,” Creamer said.
RISE St. James Director Sharon Lavigne said her organization has been trying to prevent manufacturers from continuing to pollute St. James Parish, her hometown. She said she fears Amendment 5 could make a bad situation worse.
Lavigne said she worries that the area could become inhospitable if manufacturers, such as Formosa Plastics – a plastic manufacturer who has been trying to build a plant in the parish – continue to develop in the area.
“Well, if Formosa comes in here, we’re not going to be able to live,” Lavigne said.