Competing with Texas for big energy projects is costly

From KPLC TV News

LAKE CHARLES, LA (KPLC) – Does Louisiana get enough bang for its buck when it gives big industry property tax exemptions?

For decades, there’s been debate about whether the trade-off is worth it when Louisiana gives billions of dollars in tax breaks to lure major industry to come here. The latest the Driftwood LNG Project owned by Tellurian.

Since 2016, the police jury, school board and sheriff’s department get a say in whether the exemptions should be granted. Teri Johnson, who heads Calcasieu Federation of Teachers admits it’s a complicated issue.

“What is Texas offering? What is Arkansas offering? Those type of issues all go in. So. it’s a very convoluted area for this tax exemption,” said Johnson. Johnson is concerned Calcasieu Parish may give away too much for too little. “I do think we’re giving away the farm. It’s kind of like, if somebody comes to buy your best milk cow and you just give it away, you don’t make anything on it,” she said.

Johnson said just a little less tax break could mean a lot for local teachers. “If they just paid one percent of the taxes that they would owe, over five years, that would be $20 million dollars for our school system. That’s real money,” said Johnson.

There is a grass roots movement called Together Louisiana pushing to reduce industrial tax exemptions and has a Calcasieu petition for people to sign.

However, Calcasieu Police Jury Administrator Bryan Beam says the exemptions for projects like Driftwood are just part of the equation: “There are many benefits. This is a $15.2 billion project. Throughout the five-year course of construction, we’re talking about 20,000 jobs. We’re talking over $3 billion in wages, permanent jobs of 200 to 300 once it’s built, plus another 200 probably of what’s called contract jobs. None of that includes the multiplier effect or jobs that have increased business because that’s here. Sales tax revenues during construction, we’re talking about $780 million dollars,” said Beam.

He says a report by economist Loren Scott says Texas has a lot to offer and that Louisiana must offer significant incentives to be competitive.

“It should be apparent from…statistics that Texas brings a formidable array of positives to the table when competing for new or expanding chemical facilities. To keep the playing field somewhat level, Louisiana must bring significant incentives to the table to offset Texas’ advantage, ” said Scott in “The Louisiana Economic Outlook: 2019 and 2020.

“If you’re not even in the game to forgo any money if you can’t land the project. And Texas, right next door has many more economic advantages than we do,” said Beam.

Industries that don’t keep promises to the state can lose their industrial tax exemption when it comes up for renewal after five years.

Another issue is a closed meeting in which companies and staff from the taxing bodies meet behind closed doors, but Beam says it’s to develop details for the public officials who will vote. He adds that without confidentiality at the beginning, many companies wouldn’t consider locating here.

We contacted Joi Lecznar with Tellurian Inc., which owns Driftwood. “Louisiana has had the foresight to set itself up for long-term economic growth and success using incentives to attract business investment. Driftwood will bring jobs and other revenue to the area for at least the next 40 to 50 years,” said Lecznar.

 


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