Communities to weigh the costs, benefits of corporate incentives

ST. FRANCISVILLE, La. — It’s the Friday before the start of school, and Hollis Milton is running between revving up teachers and putting out fires, but he has time to crack a Sprite in his office on the hot, hot day and brag about his students’ accomplishments. For a rural parish on the Mississippi border with its share of underprivileged kids, there are quite a few: The second-highest ACT scores in the state, a high school graduation rate 10 points above the state average, a host of teaching accolades.

“We’re a key economic driver,” Milton said, taking a break at the West Feliciana school board headquarters tucked away outside a one-stoplight downtown. “Even people who are retired say that the school system needs to do well, so my property values will do well, and it attracts families, because they know their kids are going to be well-educated.”

The key to the district’s success? A 30-year-old nuclear power plant down the road from the high school owned by the power company Entergy. When a property tax abatement on the facility expired in 1997, the parish’s tiny tax base exploded. West Feliciana’s leaders at the time dedicated a good chunk of those funds to a nascent, universal pre-kindergarten program, then rare in the state, to which Milton attributes the dramatic improvement in how his high schoolers turn out.

“Entergy came in and took something that was already becoming a good system and gave it a financial backbone that really gave it a chance,” Milton said.

The plant accounts for 41 percent of the school district’s approximately $25 million budget. $7 billion uncollected

For years, other districts haven’t been so lucky. Often in the name of competing with the Louisiana’s biggest neighbor — Texas — a state commission had rubberstamped 10-year tax exemptions on the big industrial facilities in Louisiana communities, which will leave about $7 billion uncollected between 2016 and 2020. Companies could even get the tax breaks for expansions and routine upgrades, with minimal requirements for new jobs.

But in June, under pressure from advocacy groups tired of lo- cal governments being deprived of resources, the newly elected Democratic governor, John Bel Edwards, issued an executive order overhauling the program, requiring that local governments sign off on exemptions before they’re granted. That could result in a lot more parishes having tens of millions of dollars in additional funding if they choose to exercise their newfound discretion.

The whole question about tax abatements, of course, is whether they’re needed to attract investment that otherwise would have gone to some other place. In recent decades, state and local governments across the country have escalated a war of incentives that punishes those who choose to unilaterally disarm. Even West Feliciana parish president Kevin Couhig said the tax break is essential to help parishes compete.

“If you took the 10-year tax exemption out of it, we would have lost every time,” Couhig said, remembering his time leading economic development for Louisiana governors in the 1980s. “It is what it is. I come from a generation that doesn’t expect everything to be fair. What I want to do is understand those facts, and win those competitions for mycommunity.”

Don Pierson, the current secretary of economic development, has been trying to communicate as much to current and potential businesses in Louisiana. Parish leaders, Pierson argues, know what’s good for them.

“Communities are going to evaluate that opportunity, they’re going to continue to welcome industry they’re going to compete,” he said. “And they’re going to offer very significant tax abatement programs to industry.” Larger parishes are hurting

That might be true of some parishes that have the most investment and the fewest people — like Cameron, a coastal parish of fewer than 7,000 that has some of the nation’s largest refineries and natural gas plants, including Cheniere Energy’s Sabine Pass. It gives up about $532 million a year through the tax exemption.

But parishes with a larger population to take care of could be a different story.

Up in West Feliciana, for example, Milton has to compete with Texas, too — not for huge industrial plants, but for classroom talent.

A Houston teacher’s starting salary is more than $10,000 more than it is in East Baton Rouge or New Orleans, and $6,000 more in West Feliciana, where about 15,000 people live. Milton wishes he could offer summer programs to keep underprivileged kids from falling behind. The large prison the parish also hosts, the Louisiana State Penitentiary, is always in the back of his mind.

“One of the things I’m conscious of is that we can either pay now or we can pay later,” Milton said. “In Louisiana, we face a greater challenge when we look at the amount of poverty that we serve, and nobody wants to talk about that.”

He pauses, as if reluctant to render an opinion, and then continues.

“You have people who say we’ve got to be so competitive, we’ve got to give every exemption in the world,” Milton said. “When you look at what other states do, you also have to say, what are the opportunity costs? Are we going to hurt a local school system when we give all of these dollars?”