Officials defend tax incentives for industrial projects
Long-term benefits include sales tax gains, temporary and permanent jobs
Taxpayers should take into account the long-term benefits of the Industrial Tax Exemption Program before dismissing it as foregoing billions of dollars in property tax collections, officials said Thursday.
Calcasieu Parish Administrator Bryan Beam and Jay Delafield, a tax attorney and bond counsel, spoke to the Alliance for Positive Growth about why tax incentives are necessary in attracting industry to the region. They also mentioned the benefits these high-dollar industrial projects bring to the area, including sales tax gains and wages paid, along with temporary and permanent jobs.
“The (liquefied natural gas) doesn’t end when the exemption ends,” Beam said. “You’ve got to look at the whole thing. If we don’t have (incentives), Texas is happy to take (the industries).”
Beam and Delafield also criticized a series of American Press articles that mentioned an ITEP incentive recently approved by the Police Jury, Sheriff’s Office and School Board in order to bring the $15.2 billion Driftwood LNG project here. They refuted one article that stated local officials left on the table more than $2 billion worth of industrial property tax over 10 years.
“The idea that your public officials are going to sit back and give away $2 billion is absurd,” Beam said. “We don’t have $2 billion to give. It is deferred revenue.”
Beam said the parish will get most of that back over time, with an estimated $1.3 billion in property taxes collected over a 20-year period.
“These places are going to be here a while, guys,” he said.
Gov. John Bel Edwards issued an executive order in 2016, allowing local entities to give input on tax exemptions.
The two also argued against the articles claiming the working group, appointed by the School Board, Police Jury and Sheriff’s Office, may have violated Louisiana’s open meetings law.
The meetings involved Wilfred Bourne, CPSB chief financial officer; Sharon Cutera, the Sheriff’s Office chief financial officer; and Tammy Bufkin, Police Jury finance director, along with members of the Southwest Louisiana Economic Development Alliance. The alliance attends the meetings “for informational purposes only,” according to George Swift, its president and CEO.
“It is not a board; it is not an authority,” Beam said. “It is a group of staff making recommendations. They look at investment, payroll, construction jobs, permanent jobs, long-term effect, spin off, everything and recommend yea or nay.”
Delafield agreed, saying the taxing authority is not a citizens’ advisory committee. He added that industries would not be comfortable negotiating with government entities during a public meeting.
“If you think Tellurian or Cheniere, Cameron LNG or Venture Global is going to (do that), you don’t have an understanding of how these plants work,” Delafield said.
All final decisions by the Police Jury, School Board and Sheriff’s Office were done in public meetings.
During the five years of construction on the Driftwood project, Beam said it will create more than 20,000 construction jobs, which includes $3 billion in wages, according to figures submitted by Tellurian to Louisiana Economic Development. Once completed, it will produce 200 to 300 permanent jobs, but Beam said that projection is closer to 500 jobs when contract positions are included.
Indirectly, Driftwood will bring in $5.9 billion in new business sales during construction, according to a report from economist Loren Scott. It will also bring in $1.7 billion in new wages paid and $53.5 billion in new sales taxes paid. After construction, Beam said it will generate $425 million in business sales and $7.7 million in new sales taxes per year.
Between the Police Jury, Sheriff’s Office and School Board, Beam said the Driftwood project is excepted to bring in more than $780 million in sales tax gains over the five-year construction period.
“We can do a lot more roads, drainage, sewage and everything else we need to do,” he said.
Beam called manufacturing “a great multiplier” in terms of creating the most jobs.
Beam said he is “not for all tax exemptions” and supports capping incentives at 80 percent for manufacturers. The new rules, including the cap, took effect in August, following approval on the state level. They apply to new ITEP applications.
Delafield said the Driftwood project, a subsidiary of Tellurian Inc., already qualified under an earlier set of ITEP rules, entitling them to a 100 percent tax exemption.