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

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• Judy Woodruff:

  It's 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."

• Helen Frink:

  I think there's one thing that we can agree on as citizens of Louisiana– things are not great.

• Paul Solman:

  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:

  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:

  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:

  No documents were provided for the public to see, not online or at the meeting itself.

• Elizabeth Long:

  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:

  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:

  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:

  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:

  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 Cage:

  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 Cage:

  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 Cage:

  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.