BATON ROUGE, LA (WAFB) - Leaders in the state’s and local business and manufacturing industry are reacting to ExxonMobil’s decision to withdraw its 2017 Industrial Tax Exemption Program (ITEP) requests.
Oil and gas corporation, ExxonMobil, announced Tuesday it’s withdrawing the requests from the metro council and the East Baton Rouge Parish Sheriff’s Office, who were set to vote on them during Wednesday’s meeting. According to a release from the company, ExxonMobil says the “ongoing uncertainty” involving ITEP in Baton Rouge is the reason for the withdrawal.
Exxon officials say they’re reassessing projected costs for the expansion projects.
Mayor-President Sharon Weston Broome maintains a positive outlook, but the announcement does cast doubt on the future of one of the city’s largest and most vibrant industrial partners. The release struck an ominous tone, in part saying “the perception of Baton Rouge has become one of inconsistent treatment” and adding the company will have to reassess future investments that “grow jobs, expand operations or support community projects.”
“I believe that Exxon will continue to be a strong business partner and part of the fabric of this community,” said Broome. “Exxon and Baton Rouge are synonymous. Exxon has been a part of this community for years and I believe that they will continue to be a part of this community.”
The Baton Rouge Area Chamber (BRAC) released a statement, saying ExxonMobil’s decision is a “wake-up call.”
“ExxonMobil has been the picture of corporate partnership, and extremely generous in their support of community groups, charities and nonprofits, most significantly to education and education charities. It invested $1 billion in capital investments in the last three years and pays $100 million in total Louisiana taxes annually. It employs nearly 7,000 people, and those jobs support nearly 1 in 8 jobs in our community. Nonetheless, community activists have targeted the ITEP program and this one company in particular with their derision, attacks and misrepresentations, fueling an anti-business sentiment today in our community,” the statement read in part.
BRAC said the manufacturing industry in Baton Rouge was in serious decline 15 years ago, and the city had potential to attract new manufacturing. BRAC asserts if East Baton Rouge Parish wants more investments from ExxonMobil or other manufacturers, then it should do it “resoundingly and quickly.”
Tyler Gray, president of the Louisiana Mid-Continent Oil & Gas Association, said the capital area has recently seen loss in manufacturing jobs.
“When one of the state’s largest employers is negatively impacted by our anti-business culture, all of Louisiana loses,” Gray said in an official statement. "If our state maintains the reputation of being an unpredictable location for investment, Louisiana will continue to fall behind our Gulf Coast neighbors. With all the production in the Permian and Delaware Basin, Louisiana is in a great position to strengthen its foothold on the refining sector of the oil and gas industry; but not without a fair, predictable tax and business climate.”
Louisiana Chemical Association President Greg Bowser also responded to the withdrawal of the ITEP applications.
“Unfortunately, the current state of the ITEP incentive program sends a signal to companies that Louisiana is an unpredictable place," Bowser said. "Even more, this whole process shows how difficult it is right now for a business looking to potentially invest in Baton Rouge. Companies rely on predictability and efficiency in making their decisions about everything from hiring and production to training. Right now, Louisiana has neither.”
Together Baton Rouge also made a statement regarding the withdrawal, supporting Exxon’s decision, saying they “applaud ExxonMobil’s decision to withdraw its applications for industrial tax exemptions that were being sought on its 2017 capital upgrades.” The statement goes on to say, in part, “The East Baton Rouge Parish School Board and Metropolitan Council have established clear, predictable standards for what exemptions will be approved, requiring job creation and prohibiting exemptions on projects that already have been completed. ExxonMobil’s proposed expansion of its polyolefins plant meets those standards and was approved for an ITEP late last year, with no objection from Together Baton Rouge. Its most recent exemptions on work completed two years ago did not meet those standards and so have been withdrawn.”
The withdrawal comes after the East Baton Rouge School Board rejected an ITEP last Thursday night. It was the first time the board rejected an exemption since Governor John Bel Edwards granted local entities some say in the matter with a 2016 executive order. The rule change allowed sheriffs, school boards, and metro councils to decide whether they would collect their share of the property tax. The Louisiana Board of Commerce and Industry also gets a say, as it always has.
EBR School Board President Mike Gaudet voted for the exemptions last week, but says the majority of his colleagues disagreed. He believes the vote on policy shifted somewhat to a vote on Exxon itself.
“It’s a tough call for everyone to make. The thing I’m sorry about is that this sort of became Exxon as opposed to a policy discussion,” he added.
While some are concerned over what the future of the partnership looks like in the capital area, Gaudet says the situation has a lot of moving parts and he does see value on both sides of the issue.
“It’s an area where there’s no one correct answer, so I can understand both sides of the argument,” said Gaudet.
Exxon requested the exemption, worth about $2 million over ten years, for work completed in 2017. In December of 2018, Exxon representatives told the Louisiana Board of Commerce and Industry they delayed requesting the exemption as a show of good faith so locals could have a chance to approve the plan after Edwards' rule change.