In Louisiana, are billions of dollars in corporate tax exemptions paying off?

In Louisiana, are billions of dollars in corporate tax exemptions paying off?


JUDY WOODRUFF:  It is common for cities and
states to provide tax breaks and exemptions in the hope of luring business and jobs. But in some places, there’s growing pushback. Amazon and New York City is the most high-profile
case recently. What is less known are big breaks given in
some states to traditional industries that don’t quite get as much buzz. Welcome to Louisiana. Our economics correspondent, Paul Solman,
visited there recently, as part of our regular series, “Making Sense.” (BEGIN VIDEOTAPE) HELEN FRINK, TOGETHER LOUISIANA:  I think
there’s one thing that we can agree on as citizens of Louisiana– things are not great. PAUL SOLMAN, PBS NEWSHOUR ECONOMICS CORRESPONDENT: 
One of YouTube’s unlikelier hits, a slide show asking, how it can be that a state so
rich in natural resources, can also be — HELEN FRINK:  Bottom of the list in all the
important categories, when it comes to life indicators. PAUL SOLMAN:  One answer claims the advocacy
group Together Louisiana — subsidies. Tax breaks state and local governments give
companies to set up shop, or stay in the state. The national average of tax breaks? $291 per resident. Louisiana? HELEN FRINK:  We are spending $2,857 per
capita in corporate subsidies. PAUL SOLMAN:  Eighty percent in the form
of industrial tax exemptions, in which the state’s industries, mostly petrochemical,
are freed from the local property taxes that fund services like police, parks and public
schools. UNIDENTIFIED MALE:  I’d like to welcome you
to the Board of Commerce and Industry. PAUL SOLMAN:  For 80-plus years, a state
board has approved nearly all of these tax breaks. UNIDENTIFIED MALE:  All in favor of approving
these in globo indicate with an aye. PAUL SOLMAN:  A hundred percent exemption
for 10 years. UNIDENTIFIED MALE:  Motion carries. PAUL SOLMAN:  Problem is, the local counties,
called “parishes” in Louisiana, don’t get the taxes the companies would otherwise pay. MICHAEL TRITICO, ENVIRONMENTALIST:  They’re
being given billions of dollars in this Parish alone in incentives every year. Billions. PAUL SOLMAN:  In southwest Louisiana’s Calcasieu
Parish, environmentalist Mike Tritico showed us a coal-fired power plant built in the 1950s. That’s a huge plant. MICHAEL TRITICO:  Yes, that’s a huge plant. It produces a lot of electricity and it gets
a huge set of tax breaks every year. PAUL SOLMAN:  Even though it’s been there
forever. MICHAEL TRITICO:  Yes. PAUL SOLMAN:  But isn’t the idea that it’ll
keep them here, as opposed to — MICHAEL TRITICO:  Well, they’re not going
to go anywhere else. How can they pick up that plant and leave? They can’t. PAUL SOLMAN:  The hot exemption of the moment
is for a new liquefied natural gas company, Driftwood LNG, planning a terminal in Lake
Charles. MICHAEL TRITICO:  Along this stretch here,
between the Gulf Intracoastal Waterway and the opposite shore mouth of the industrial
canal. PAUL SOLMAN:  For this, says electrician
Heather Ames — HEATHER AMES, RESIDENT, LAKE CHARLES, LOUISIANA: 
We gave away potentially the largest tax exemption in the history of United States. PAUL SOLMAN:  To try to reverse the decision,
Ames joined forces with schoolteacher Elizabeth Long, a Republican, and Democrat Georgina
Graves. GEORGINA GRAVES, RESIDENT, SULPHUR, LOUISIANA: 
No documents were provided for the public to see, not online or at the meeting itself. ELIZABETH LONG, RESIDENT, MOSS BLUFF, LOUISIANA: 
And the fact that we were not allowed that information and had to read in the paper that
$2 billion was gone, people are very upset. GEORGINA GRAVES:  We’ve been insulted. PAUL SOLMAN:  Insulted how? GEORGINA GRAVES:  Libtards. Like, you’re libtards, you don’t know what
you’re talking about. We should be thankful for the amount of jobs
that these industries are blessing you with. PAUL SOLMAN:  But at the cost of as much
as $2 billion in taxes. ELIZABETH LONG:  Taxes that then our schools
lose, our roads lose, our children lose. PAUL SOLMAN:  But, says Chamber of Commerce
president George Swift, the Parish wins, because of the new jobs. And not just jobs at the plant. GEORGE SWIFT, PRESIDENT, CHAMBER SWLA:  About
7,300 construction workers will be in the area building the plant for four or five years. PAUL SOLMAN:  But how many from the parish
itself? HEATHER AMES:  There are absolutely no stipulations
that anybody has to come from Calcasieu Parish, or the state of Louisiana. PAUL SOLMAN:  At a trailer park housing construction
workers on other projects:  license plates from Texas, Alabama, South Dakota, Alaska. GEORGE SWIFT:  Wherever they’re from, they’re
going to be buying things locally– gasoline, food, all of that. And then the permanent jobs are created, and
that’s where we get the long-term growth for the area. PAUL SOLMAN:  And how many long-term jobs? GEORGINA GRAVES:  Their initial application
was for 300 permanent, and then the application showed 200 for jobs, permanent jobs. PAUL SOLMAN:  Which makes the math pretty
easy: $2 billion in local property tax relief; 200 jobs; $10 million a job. But wait a minute. Under Louisiana’s new governor, John Bel Edwards,
three local governing bodies now decide, and they approved this deal. But that’s because, says Elizabeth Long — GEORGINA GRAVES:  The Chamber of Southwest
Louisiana told three governmental entities what they were going to do. PAUL SOLMAN:  To what extent were you involved
with the three entities that had to approve, and did approve this project? GEORGE SWIFT:  We are the facilitator for
the projects. We want the projects to come to our region. PAUL SOLMAN:  The bottom line, to the chamber’s
George Swift: GEORGE SWIFT:  Do we grant the tax exemption
and get the industries and the jobs, or do we get nothing? PAUL SOLMAN:  But if you have the ports,
the pipelines, the product, natural gas, why didn’t you at least try to drive a harder
bargain? GEORGE SWIFT : We do have all the resources,
but there’s a lot of competition all over the United States. PAUL SOLMAN:  Driftwood’s Texas-based parent
company declined our interview request, but did issue a statement — that the project
would generate more than $700 million in sales taxes the first ten years, and then, after
the abatement expires, more than $100 million a year in property taxes. But a key question — would the company really
not have come without the exemptions? Surgeon Alan Hinton, a lifelong Republican,
doubts it. DR. ALAN HINTON, RESIDENT, LAKE CHARLES, LOUISIANA: 
Industries want to be in this area because of the ship channel, the pipelines, the rail
system and the interstate system. And people here are willing to accept big,
heavy industry in their backyard. PAUL SOLMAN:  Bridget Hinton, an engineer,
manages her husband’s practice. BRIDGET HINTON, ENGINEER:  We ran our own
business for over 11 years. We had approximately nine employees, and we
didn’t get a tax exemption. ALAN HINTON:  I’m astounded that this program
has been going on for 80 years, under the radar. BRIDGET HINTON:  No idea that that much money
was being given away. It just takes a while for people to open their
eyes. ALAN HINTON:  My eyes were opened. PAUL SOLMAN:  How big is this facility? EDGAR CAGE, TOGETHER LOUISIANA:  Approximately
three miles long and extends back another mile and a half to the Mississippi River. PAUL SOLMAN:  In East Baton Rouge, Edgar
Cage is in the business of opening eyes as well. Consider Exxon Mobil, the biggest taxpayer
in the Parish, and the largest tax break beneficiary, receiving more than 200 exemptions over the
past two decades. Recently, the company applied for two more,
retroactively, for projects completed in 2017. EDGAR CAGE:  An exemption is the incentive
to bring either new business here or for existing company to expand. It is something put in place to change behavior. If the behavior had already happened, it’s
then not an exemption. It’s a gift. PAUL SOLMAN:  Moreover, Cage’s group, Together
Louisiana, found that, despite all those tax exemptions, Exxon Mobil’s Baton Rouge facilities
collectively lost more than 2,000 jobs. EDGAR CASE:  We’re not against Exxon Mobil. They have fiduciary responsibility to reduce
business costs as low as possible. But when they are exempt from paying property
taxes, I have to pay more, and small businesses have to pay more. PAUL SOLMAN:  Meanwhile, just blocks from
the refinery… EDGAR CASE:  This community has been forgotten. It’s been neglected. PAUL SOLMAN:  But I think a lot of people
driving through here would be thinking, you know, it’s the culture of the place. What could Exxon Mobil do to make t things
better? EDGAR CASE:  If more money is being put into
school, put into workforce development, these people would have hope. These people would have opportunity. PAUL SOLMAN:  Exxon Mobil’s response is that
it contributes about $4 million to the community each year through grants and employee matching
gifts. UNIDENTIFIED MALE:  The next item on the
agenda: the ITEP application for Exxon Mobil Corporation. PAUL SOLMAN:  But this January, arguments
like Cage’s carried the day. UNIDENTIFIED FEMALE:  Please vote. PAUL SOLMAN:  The local school board, strapped
for cash, rejected the tax breaks. UNIDENTIFIED MALE:  The motion fails. PAUL SOLMAN:  Exxon Mobil blamed what it
called confusion among local elected officials, inundated with misinformation from activist
groups. GEORGE SWIFT:  I think it was a tremendously
negative signal not only to Exxon but to other industry. And it just creates doubt as to, is this a
good place for industry to locate? PAUL SOLMAN:  The Chamber of Commerce president
doesn’t support tax breaks for all energy firms, though. GEORGE SWIFT:  There was one project that
we did not recommend, but the boards ended up approving anyway. It was a solar farm. PAUL SOLMAN:  A solar farm, with 200 construction
jobs, but only one permanent one. GEORGE SWIFT:  If it doesn’t create jobs,
we don’t think it fits in the industrial tax exemption criteria. PAUL SOLMAN:  Heather Ames has a different
interpretation of the chamber’s objection. HEATHER AMES:  I think that they’re bought
and sold by the oil and gas industry, and solar has no place in that. PAUL SOLMAN:  For the PBS NewsHour, economics
correspondent Paul Solman, reporting from Louisiana.

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