Analysis: Parishes with Industrial Tax Exemptions Received More Property Tax

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BATON ROUGE (The Center Square) — Analysis of the state’s Industrial Tax Exemption Program by the Louisiana Legislative Auditor reveals parishes with the highest amount of tax exemptions collected higher amounts of property taxes in 2021.

Louisiana Legislative Auditor Mike Waguespack issued an informational brief to lawmakers Monday on the ITEP program and its impact on local governments, using data from the Louisiana Department of Economic Development and Louisiana Tax Commission.

Gov. John Bel Edwards in 2016 reduced what was a 100% ITEP exemption to 80%, or 93% for “Mega Projects,” and incorporated a job requirement in exemption contracts. The changes, accomplished through executive order, also added a level of local government approval that was not previously required.

LLA analysis found the ITEP exemptions cost local governments in Louisiana $1.5 billion in foregone property tax revenue in calendar year 2021.

Data shows Louisiana had $54.1 billion in taxable assessed value and levied $5.3 billion in taxes, compared to $12.2 billion in ITEP exempt assessed value resulting in $1.5 billion in exempt taxes.

The report also found parishes with the highest amounts of ITEP exemptions per capita tend to have higher property tax collections overall.

“Specifically, the 25 parishes with the highest amounts of taxes exempted under ITEP per capita still levied $1,458 per capita on property taxes net of exemptions in 2021, 48.3% higher than the $983 in taxes levied per capita in the remaining 39 parishes,” according to the report. “One factor contributing to the higher property tax revenues in these 25 parishes is that ITEP recipients contributed an estimated $396 more in taxes levied per capita.”

The dynamic stems from other non-exempt property owned by ITEP recipients, such as property purchased more than 10 years ago, and other land and equipment ineligible for ITEP under the new rules.

The LLA report came one day before a study of the ITEP program by the Institute for Energy Economics and Financial Analysis that found the percentage of property that was actually taxed increased from 37% in 2016 to 50% in 2021. That increased annual industrial property tax revenue by more than $280 million over the same time frame, resulting in $113 million in additional revenue for schools, $55 million for law enforcement and $115 million for other parish services.

“We have increased funding for local governments, public schools, and law enforcement by more than $750 million,” Edwards said in response to the analysis. “And we’ve done it all while more than doubling the number and value of ITEP projects in Louisiana.”

Parishes with the highest total amounts exempted under ITEP in 2021 include $704.8 million in Cameron, $270.7 million in Calcasieu, $123.9 million in Ascension, and $119.8 million in St. Charles, according to the LLA report.

Cameron Parish topped the list for tax amount exempted as a percentage of amount levied at 1,211.8%, the only parish over 100%. Calcasieu Parish’s 94.9% was second.

For the top 25 parishes with ITEP exemptions, the total amount exempted was $1.439 billion, compared to $44.9 billion in the remaining 39 parishes. The top 25 ITEP parishes exempted 64.5% of the amount levied, while that percentage for the remaining 39 parishes was 1.5%.

Statewide, the ITEP exemptions totaled $1.484 billion, or 28.1% of taxes levied, according to the LLA.

Chemical manufacturers accounted for the bulk of ITEP tax exemptions at 80.7%, followed by petroleum and coal products manufacturers, which took the next largest share of 6.5%.

The report broke down total dollar amounts exempted by industry, with about $1.2 billion going to chemical manufacturers, $96.6 million for petroleum and goal products manufacturers, $93.5 million for utilities, $24.2 million for paper manufacturers, $12.6 for food manufacturers, $12.3 million for wood product manufacturers, $4.6 million for machinery manufacturers, $4.1 million for fabricated metal product manufacturers, $3.4 billion for oil and gas extraction companies, $2.8 million for plastics and rubber companies and $31.9 million for all others.

“Of the 25 parishes with the highest ITEP exempt taxes per capita, chemical manufacturing is most commonly the industry receiving the largest amount of ITEP exemptions within the parish,” the report read. “On the other hand, among the remaining 33 parishes that had ITEP exemptions, the wood product, chemical, food, and machinery manufacturing industries were tied as the industries most commonly receiving the most ITEP exemptions.

“The remaining six parishes (Catahoula, Claiborne, Franklin, Madison, Tensas, and West Carroll) reported no ITEP exemptions in 2021.”

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