BATON ROUGE, La. (AP) - Gov. John Bel Edwards further tightened the rules Friday for a property tax break given to manufacturers in Louisiana, issuing new regulations that shrink the number of years the tax break will be available to new applicants for the program - and cut its value.
The latest changes, combined with adjustments the governor made in June, are expected to lessen the number of tax breaks given out, thereby reducing the millions of dollars siphoned each year from local government agencies that rely on property taxes to operate.
Under the decades-old industrial tax exemption program, new and expanding manufacturing facilities are allowed an exemption from local property taxes for up to 10 years - an initial five-year period and a five-year renewal. The state’s Board of Commerce and Industry and the governor must sign off on the exemptions.
Edwards’ executive order will limit the renewal period for new applicants to three years while cutting the tax break to 80 percent for renewals.
Those restrictions come on top of previously announced changes that Edwards made requiring the tax breaks to be tied to job creation and retention and involving local government agencies in the decisions.
“Going forward, the changes are very substantial,” Robert Adley, one of the governor’s appointees to the Board of Commerce and Industry, said at a committee hearing that included talk of the new regulations.
The regulations are a sea change in a program that has hummed along for decades with the board and past governors often acting as rubber stamps, giving little scrutiny to applications. Edwards’ new rules have stalled some tax break requests entirely and sent other facilities back to tweak their applications in the hopes of meeting the toughened criteria.
Business organizations have warned Edwards’ changes could cause uncertainty and disrupt pending manufacturing projects. Critics of the program say tax breaks have been granted too haphazardly, with little obvious benefit to the state or to the parishes that are losing the property tax revenue.
Edwards’ executive counsel Matthew Block said the governor believes the tax break program will remain “very generous” to businesses.
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