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Waguespack says governor’s order on industrial tax exemption equivalent to ‘gutting’ the program


July 14, 2016
By Ryan Broussard

The head of the Louisiana Association of Business and Industry says Gov. John Bel Edwards’ executive order changing the state’s industrial tax exemption program is paramount to “gutting of one of the most import economic development tools we have here.”

LABI President Stephen Waguespack tells Daily Report that the timing of the order is also unusual given the thousands of jobs the state has lost since the price of oil plummeted nearly two years ago.

“We don’t think this was the correct course to take,” Waguespack says.

Edwards on Friday issued an executive order that contained two substantive changes to the long-running program: Local parish governments must have a seat at the table during discussions about exempting local property taxes—including how much would be exempted—and businesses must show job creation or job retention to merit the exemption.

The industrial tax exemption program allows businesses to obtain a 100% exemption on local property taxes on new purchases for buildings and equipment. The program is overseen by the state Board of Commerce & Industry.

The changes came after scrutiny emerged recently over the program and how the exemptions were doled out. A report by Together Louisiana called on Edwards to reform to the program.

Don Pierson Jr., secretary of Louisiana Economic Development and an Edwards appointee, has said he believes the changes are “fair” and that “both the local governance and job requirements align with LED’s mission of cultivating jobs and economic opportunity for the people of Louisiana.”

However, Waguespack says the moves, which come on the heels of a recession and three changes to the tax code in 12 months, put the state into “uncharted waters” because businesses are unsure how the new application process will work and if that new process will affect how economic development packages are crafted.

“I think most of the calls (we’re receiving) right now are about the uncertainty it creates,” Waguespack says.

He adds the program is essential for the state to compete with Texas and other countries for massive industrial and manufacturing projects.

The proper time to address the exemption, Waguespack says, would be the 2017 regular legislative session when lawmakers may take up the Herculean task of reforming the state’s tax system. Then there could be discussion about how the industrial tax exemption changes affect the state’s tax system.