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For 80 years Louisiana was the only state in the country to allow an unelected state board to exempt industry from paying local property taxes without the approval of local governments.

An executive order from 2016 gave parish governments a say over their own tax revenue.

Senate Bill 151 is a proposed constitutional amendment that would protect local control for good.

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Breaking: New report shows capital investment and industrial start-ups increased under local control. Full Report

What's at stake?

What's at stake is whether $2 billion in local property tax revenue should be used for corporate tax exemptions or to fund public schools, sheriffs and other local services.

The question is whether the authority to make that decision should rest with an unelected board—the Board of Commerce and Industry--or with local elected officials.

Why is this even a question?

In 1936, a special carve-out was added to Louisiana's constitution which made it the only state in the country to allow an unelected board to exempt industry from paying local property taxes without the approval of the local governments.

It's called the Industrial Tax Exemption Program, or ITEP. It's the most expensive, and most generous, corporate tax exemption program in the nation.


How did ITEP get out of control?

ITEP got out of control because authority over the exemptions was put in the hands of an unelected board empowered to give away local government's money without local government's approval.

  • The program began to operate on auto-pilot.
  • For more than 80 years, the board rubber-stamped thousands of exemption requests every year. Requests were approved “en globo,” with 99.95% of exemptions approved.
  • Companies weren't required to create jobs to get the exemptions. No cost-benefit analyses were conducted.
  • From 2000 to 2018, the Board of Commerce and Industry gave away $23 BILLION in exemptions to a few hundred companies, and those companies, over the same period, actually CUT their net employment by 26,520 jobs.

What Changed?

All this changed in 2016, when Governor John Bel Edwards issued an executive order giving local governments authority over approving exemptions in their jurisdictions. Local governments now have a seat at the table. They are using more discretion. The number of unjustified exemption requests has declined. And local entities are realizing more revenue as a consequence.

How Much More Revenue?

In 2021, parish governments across Louisiana realized more than $282 million more in annual industrial property tax revenues than in 2016.

Law enforcement districts + $55 million
Parish school systems + $110 million
Local governments + $117 million
That's because more industrial property is now on the tax rolls—about $16.6 billion more than in 2016. Today, 50% of industrial property in the stake is being taxed vs. only 37% before the reforms.

What would Senate Bill 151 Do?

Senate Bill 151 permanently protects local control over local tax dollars so our elected officials have a say in what happens with that money.

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Why an amendment?
Because state-level control over ITEP was written into the constitution in 1974, any lasting change to the approval process must also be enshrined there. Unless the program is constitutionally protected, local governments could lose the control they have over granting tax breaks in their own parishes, and industry could lose the stability and predictability that comes with permanently establishing the program at 80% for up to 10 years on legitimate, new investments.
Is industry leaving because of the ITEP reforms?

In a word, no. Since the reforms, there has been a 47% increase in the value of capital investments approved for ITEP exemptions, driven by a 7% increase in the number of start-up ITEP applications approved.

Since 2016, 96% of all ITEP requests have been at least partially approved by local governing authorities, and 84% have been fully approved, meaning locals want to work with industry. They just want a seat at the table. No manufacturer in the state has scrapped a project because its ITEP request was denied.

Does Texas have an industrial tax exemption program?
Yes. Louisiana exempted more than 10 times as much industrial property as Texas in 2021, even though Texas’ industrial sector is about five times larger than Louisiana’s. Texas’s comparable program is under local control with the discretion of county taxing bodies.
Why have ITEP applications decreased?
There has been an 83% decrease in the overall number of ITEP applications post-reforms, but a 745% increase in the average investment amount per application. The entirety of the decrease in applications appears to be accounted for by a decrease in the number of miscellaneous capital addition applications per the 2016 reforms, or a consolidation of what previously were submitted as multiple smaller applications into a single application submitted under an advance notice.