Story in the Advocate by Sam Karlin
ExxonMobil on Tuesday said it will drop its pending requests for property tax breaks in Baton Rouge and warned the “uncertainty” surrounding tax incentives could deter future spending at its local plants.
The move came days after the East Baton Rouge Parish School Board, for the first time, voted to reject two requests by ExxonMobil to exempt it from paying a combined $2.9 million over 10 years to local schools. Exxon was set to ask the Metro Council Wednesday to approve the exemptions.
Exxon was seeking the tax breaks through the Industrial Tax Exemption Program, or ITEP, a longstanding and controversial property tax benefit for manufacturers.
Several local Exxon leaders issued a terse statement Tuesday decrying a “lack of predictability” and “confusion” surrounding the ITEP program. The statement was attributed to polyolefins plant Manager Stephen Hamilton, chemical plant Manager Dave Luecke, refinery Manager Gloria Moncada, plastics plant Manager Angela Zeringue and Port Allen lubricants plant Manager Scott Gleason.
"Unfortunately, the perception of Baton Rouge has become one of inconsistent treatment from one company to another, a lack of predictability and confusion among local elected officials, who are inundated with misinformation from activist groups," the company said. "We question if anti-business activist groups are opposed to the state ITEP rules or just opposed to ExxonMobil’s participation in the program."
Together Baton Rouge, the advocacy group that has railed against the ITEP program, applauded Exxon’s decision.
“Local standards provide the thing that’s most important, both for our corporate partners and for our community, which is predictability,” said the Rev. Lee T. Wesley, of Together Baton Rouge. “What’s new is that, for once, it’s not the predictability of a rubber-stamp; it’s the predictability of a genuine standard. That’s a positive and important change.”
Changes sought by Gov. John Bel Edwards “brought ITEP back in line” with Texas and the way the rest of the country handles exemptions, the organization said. Both the School Board and Metro Council established standards for how to approve the exemptions in recent months, and the exemptions in question did not meet those standards, the group said.
Together Baton Rouge was rallying members this week ahead of the Metro Council meeting, urging members to ask their council member to reject the tax break requests.
Exxon completed several capital projects at its Baton Rouge sites more than a year ago, but said it waited to bring the exemptions for a vote until new rules were implemented for the state's ITEP program. Edwards reined in the program and gave local officials a say in whether to award the exemptions with a 2016 executive order. Now it offers an 80 percent exemption over a decade, instead of 100 percent. Before the reform, the state Board of Commerce and Industry routinely approved the local property tax exemptions without input from locals.
Exxon had already dropped two of the five ITEP requests before the Board of Commerce and Industry met and approved the remaining exemptions last month. The third ITEP request is at the company's West Baton Rouge lubricants plant, and was approved by local officials there.
But for the first time last week, the East Baton Rouge Parish School Board voted to reject the two exemption requests in Baton Rouge. Because of state rules, Exxon had the opportunity to seek exemptions from the property taxes levied by the Metro Council and Sheriff, even though the School Board voted to reject the exemptions from its millages.
ExxonMobil shifting attention to Metro Council after School Board rejects tax break requestsNow, Exxon spokeswoman Stephanie Cargile said, the company will not pursue the tax breaks from the Metro Council or Sheriff Sid Gautreaux.
The requests in Baton Rouge were for $64 million in spending at the Exxon refinery, which created 18 jobs, and $3 million in spending at the polyolefins plant, which created zero new jobs. Exxon already won approval locally for a $31.7 million exemption on a separate potential expansion at its polyolefins plant that would be worth more than half-a-billion dollars. The firm has not yet made a final investment decision on building the project, but one is expected soon.