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Losing opportunity?

Posted by: George Swift on Tuesday, February 19, 2019

There are no certainties in the field of economic development.  

Amazon’s abandonment of the New York City area was a major shock. 

Amazon had conducted a very open solicitation for proposals to locate a new headquarters and hundreds of locations competed.  Northern Virginia and New York City were selected to split the project.  The Amazon withdrawal from NYC cost the area over 25,000 jobs.  In addition to the direct jobs lost, this action destroys new opportunities for thousands of small businesses, real estate developers, and service companies.  This decision also reinforces New York as a non-business- friendly area.  Now, Amazon will simply expand into Northern Virginia and the Nashville area. 

Recently, in Baton Rouge, the school board rejected Exxon Mobil’s request for tax incentives for two projects.  The company has withdrawn their application and future expansion plans in Baton Rouge are in jeopardy.  Exxon Mobil has been the largest taxpayer in East Baton Rouge and one of the bedrock industries who have provided employment, and provided charitable and civic contributions to benefit the area and state. 

Opposition to a recent property tax exemption for a LNG project in Calcasieu is causing industry concern.  The two biggest misconceptions are: 

  1. Tax exemptions are taking away money from our schools and public improvements. 
  2. The industries will locate here anyway because of the amenities of our region.

 The industrial tax exemption program, or ITEP, does not affect existing revenue.  If the project does not locate here, there will be no additional income.  After the exempted period, property tax is paid.  

Recently, Roy O Martin in Allen Parish completed their 10-year exemption and began making payments to local governments.  The first of many annual checks was for $3.2 million for Allen Parish governments. 

To the second point, industrial incentives are necessary because job-creating projects are in high demand.  At any given time, there are probably less than 200 active projects under consideration in the nation.  Competition is fierce.  If no store offered sales, we would have to pay full price for everything we buy.  Due to competition, stores have sales and closeouts.  So if a store wants to remain competitive they have to offer sales and promotions.  So it is among states.  Louisiana has used ITEP to be competitive and it has worked well. 

Prior to Governor Edwards’ revision of the ITEP, industries could count on the tax exemptions being granted for up to 10 years.  They can factor that in when preparing the business plan to determine if the industrial project will make money in Louisiana or another state.  Now, under revised rules from the governor the industries have a hard time determining the value because of uncertainty. 

SW La. is in the midst of an unprecedented industrial boom.  The benefit of growth is best summed up in one word: Jobs.  Over 18,000 permanent jobs are being created not to mention a larger number of construction jobs.  With increased sales and property taxes, our schools, parish and city governments have more income for increased teacher compensation, better schools, water, drainage, and amenities such as parks and recreation. 

All of this adds to the quality of life which will help us retain our young people in SW La.  Perhaps, most importantly, these industrial jobs are a way forward for the 40 percent of our residents who are working paycheck to paycheck and barely making it, and for those who are unemployed.  With skills and training these jobs are available. 

Our overall standard of living will rise.  We are passionate and convinced that our five-parish region has a great future.  However, whether uninformed or deliberate, opposition to our industrial projects and the incentives necessary to attract them will only harm those who need the jobs most.  Our region has blown quite a few opportunities through the years.  Let’s join together and take advantage of the opportunities before us.  It’s not about you and me.  It’s about our future generations.

George Swift is president/ CEO of the Southwest Louisiana Economic Development Alliance.  Contact him at 337-433-3632 or gswift@allianceswla.org. 

Link: http://digital.olivesoftware.com/Olive/ODN/AmericanPress/shared/ShowArticle.aspx?doc=AMP%2F2019%2F02%2F19&entity=Ar00901&sk=C0A4161B&mode=text

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