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NY Times, Feb. 5, 2019
A School Board Says No to Big Oil, and Alarms Sound in Business-Friendly
Louisiana
By Richard Fausset
BATON ROUGE, La. — It was a squabble over $2.9 million in property-tax
breaks — small change for Exxon Mobil, a company that measures its
earnings by the billions.
But when the East Baton Rouge Parish school board rejected the energy
giant’s rather routine request last month, the “no” vote went off like a
bomb in a state where obeisance to the oil, gas and chemical industries
is the norm.
The local chamber of commerce took out a full-page newspaper ad, warning
of a rise of “radicalism.” The head of the Louisiana Association of
Business and Industry wrote that “the anti-business crowd has had their
fun,” but needed to “cool their jets.”
And now, somewhat surprisingly, business-friendly Louisiana finds that
it is the latest flash point in a roiling, community-by-community debate
that pits liberals and local activists against defenders of the lavish
tax incentives offered to woo big business.
It has been a David vs. Goliath story in the Louisiana capital, where a
grass-roots coalition of black and white churches, activists and
ordinary citizens have successfully clamored to democratize a system
that used to dole out billions in property-tax breaks without giving the
local school boards, city councils and other government entities that
depend on those taxes any say in the matter.
The vote has also revived a vexing, and defining, Louisiana question
about the deference a perennially impoverished state must show to big
business.
“We’ve allowed the oil and gas industry to hijack our democracy,” said
Russel L. Honoré, a retired Army lieutenant general who earned acclaim
for leading the military response to Hurricane Katrina, and who had
urged the East Baton Rouge Parish school board to reject the exemptions.
“The industry will brag about it all the time, how well we’re doing in
terms of business development. Well, if we’re doing so well, why are we
the second-poorest state?”
Complaints that state and local governments have given away the farm to
big business have flared recently in other states as well, most sharply
in New York City, where liberal politicians and union supporters have
blasted the incentives of up to $3 billion that helped woo Amazon’s new
corporate offices in Queens. In Virginia, a socialist state House
member, Lee Carter, has called a $70 million grant package for the chip
maker Micron “corrupt.”
But the tone is markedly different in Baton Rouge. Though the city is
home to the state’s flagship university, it is more Bakersfield than
Berkeley, defined strongly by the business and culture of the oil patch.
Exxon Mobil’s vast old refinery on the North Side has employed
generations of local workers. It is the area’s largest manufacturer and
largest taxpayer.
Dawn Chanet Collins was among the school board members who voted against
the tax break in a 5-4 vote in mid-January. Though she praised the oil
giant for the donations and volunteer hours it showers on local schools,
she said that giving the company exemptions for the already completed
expansions of the refinery and a polymer plant simply did not make sense.
The school district is in a budget crisis, and it is looking for ways to
cut roughly $30 million in future spending. Layoffs may be on the table.
Teachers say that administrators have even been rationing paper.
“It would have been completely irresponsible for the board to say, ‘Go
ahead, keep your money,’ when we have to fill a $30 million gap on our
end,” Ms. Collins said.
For decades, industrial property-tax breaks in Louisiana were in the
sole control of a little-noticed state board that approved them with no
local input — a system unique in the nation, according to Greg LeRoy,
executive director of Good Jobs First, a nonprofit group that tracks
such incentives.
Gov. John Bel Edwards, a moderate Democrat, overhauled the process in
2016 with an executive order that for the first time in 80 years gave
local governments the right to decide whether their revenue would be
sacrificed to aid industry.
A spotlight on the people reshaping our politics. A conversation with
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cycle, telling you what you really need to know.
In the months before Mr. Edwards’s order, the state’s Industrial Tax
Exemption Program, or ITEP, had been thrust into the public debate by
the efforts of the grass-roots coalition, known as Together Baton Rouge.
Before then, it had gone largely unnoticed by everyone except those who
benefited from it.
The appointed panel that ran the program, the Board of Commerce and
Industry, handed out nearly $10 billion in local tax exemptions between
2008 and 2016, but its actions were rarely covered in the press. Many
Louisianans had no idea what the board did.
“Nobody knew about it,” Ms. Collins said. “It had gone on for so long
that people had forgotten.”
Together Baton Rouge and its sister organization, Together Louisiana,
argue that the industrial tax breaks starve local schools and
governments of badly needed funds and leave them unable to lift a state
mired toward the bottom of national rankings on education, crime and
infrastructure. In Baton Rouge, one in four residents lives in poverty.
Their message has found an audience: Together Louisiana’s YouTube video
about the exemptions, posted in November and titled “Why Louisiana Stays
Poor,” has been viewed more than 600,000 times.
A few days before the Baton Rouge school board vote, the groups held a
meeting at St. Mary Baptist Church to organize opposition to the Exxon
Mobil application. Scores of people crammed into a Bible study classroom
decorated with maps and photos of the Holy Land.
Edgar Cage, who organized the meeting, was careful to say that no one
was accusing Exxon Mobil of any wrongdoing. “All we’re saying is, we
want a change,” he said. “We want a balance.”
Business leaders reacted strongly to the Baton Rouge vote because they
are worried about much more than just how a few capital improvements are
taxed. As much as $90 billion in oil and gas industry investments could
come the state’s way in the next decade, driven in large part by the
boom in domestic shale gas drilling, according to David Dismukes,
executive director of the Center for Energy Studies at Louisiana State
University.
By itself, Dr. Dismukes said, the school board’s vote “was not a big
deal — but the precedent it sets is going to be really big for these
projects on the drawing board that are $100 million or $200 million.”
Critics of the 2016 overhaul that gave local officials a say over tax
breaks argue that it deprives the state of a big competitive edge it
used to enjoy: one-stop shopping. Instead of dealing only with a central
state board, businesses must now make their case for tax breaks to a
host of parish councils and school boards and sheriffs, and win them
over individually.
Last week, State Senator Mack A. White Jr., a Republican from the Baton
Rouge area who used to work for Exxon Mobil, said he planned introduce a
bill to reverse the overhaul and take approval power away from local
officials again.
There have also been stabs at damage control and soul-searching. Mayor
Sharon Weston Broome of Baton Rouge spoke on Jan. 28 at what the local
newspaper described as a “pep rally” for Exxon Mobil.
On Sunday, Tim Morris, a columnist for The Times-Picayune in New
Orleans, compared the state’s tax-break system to the $241 million
contract extension the New Orleans Pelicans of the N.B.A. offered to
their star player Anthony Davis — an offer he turned down, asking to be
traded instead.
“Why do we have to offer exorbitant bribes to get people (and
businesses) to stay here?” Mr. Morris wrote.
But for others — including some local government officials freshly armed
with the new veto power — the tax breaks are a pragmatic choice in an
increasingly competitive world.
In November, local authorities in Calcasieu Parish unanimously approved
a tax break worth $2 billion over 10 years for a $15 billion liquefied
natural gas facility. Eric Tarver, a car dealer who sits on the parish
school board, said he feared “playing chicken” with a big company that
was promising to create hundreds of jobs.
“Should we have negotiated with them? Maybe,” Mr. Tarver said. “But the
benefits of them coming far outweigh the risk of haggling with them and
having them go to Corpus Christi or Houston, or even Lafayette.”
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