Saturday, April 20, 2024

LaRose: Conditions that create jobs, not costly incentives, need to be prioritized in Louisiana

by BIZ Magazine

All too often, a business that’s been lured to Louisiana with generous tax breaks and other taxpayer-supported enticements fails to live up to the hype that preceded their arrival. The form that typically takes is an employer that fails to deliver promised jobs but readily accepts exemptions to their property taxes that benefit their bottom line.

Labor Day gives us an opportunity to stress that a job-friendly climate has to be prioritized in Louisiana. K-12 schools and universities must be adequately funded and infrastructure has to be modern and in good working order. 

What we see instead is an emphasis on incentives and tax policy that tilts the economic justice scales heavily toward business. And it might all be for naught when you consider how culture wars being fought in Louisiana discourage any diversification in the state’s economy.  

The most recent case in point involves the American Plant Food (AFP) fertilizer plant proposed for the Waggaman community in Jefferson Parish. When the Texas company first started promoting its planned facility, it promised more than 100 jobs with an average salary of $120,000. Its flyers said as much at a community event held last October. AFP also intends to seek an Industrial Tax Exemption Program (ITEP) waiver to save $47 million in local property taxes. 

There was a slight adjustment to the job numbers when the Times-Picayune reported on the project at the time. In addition to 220 temporary construction jobs for the $225 million plant, the average salary for 100 permanent jobs at the site was dialed back to $100,000.

Fast forward to March, and the company placed its job number at 103 on a permit application it submitted to the Louisiana Department of Environmental Quality. But just three days later, APF filed its paperwork for an ITEP tax reduction and listed a job-creation figure of 13 with an average salary of $56,000. 

The math is pretty easy — the company now apparently intends to create just 13% of the jobs first proposed at less than half the pay originally promised. The $56,000 salary falls just below the Jefferson Parish median. 

APF has not responded to our questions about the drastic reduction in jobs and pay. Parish officials, who get the right of first approval on ITEP applications, have also been quiet.

Thankfully, Louisiana officials tie Quality Jobs income tax breaks to actual job creation, meaning businesses only see the upside if they actually make hires. But APF is far from the only company that’s been offered economic benefits independent of employment goals.

Earlier this year, Stephanie Riegel with the Times-Picayune reported on a host of tech companies that came to Louisiana with pledges of significant employment, only to fall well short of those goals. DXC Technologies, High Voltage Studios (makers of Fortnite), Gameloft and GE Capital arrived with great fanfare only to fall short of expectations.

To be sure, some broader market factors have an influence when a company fails to meet hiring objectives. But this repeated pattern of economic development disappointments speaks to matters that no amount of financial inducement can offset.

Many of the issues our legislature devotes so much time to don’t exactly extend a red carpet to companies looking for an open-minded, forward-thinking environment to do business. Last time we checked, high-tech companies aren’t seeking out space where states are focused on further marginalizing certain communities.  

When the state legislature devotes most of the time it spends debating education on matters such as whether school employees can discuss sexual orientation or gender preference, it’s not an attractive business calling card. The same goes for moves to limit academic freedom at the higher education level.

When lawmakers vote to deny health care to transgender youth and outlaw reproductive rights, it’s the exact opposite of putting out the corporate welcome mat. And does anyone see companies wearing out a path to Louisiana because its leaders continue to take a fundamental stand on the Second Amendment?

Servility has for too long been Louisiana’s economic development mindset. When other states are offering similar if not better incentives, you have to look at what separates you from the crowd. Economic development professionals will frequently point to quality education and health care access, progressive government and diverse communities as top wants from employers. Tax breaks should be the sweetener in the deal and not the main course.

If Louisiana sticks to the status quo, you can expect more of its economic sizzle to turn south and fizzle.

Greg LaRose is editor of the Louisiana Illuminator and has covered news for more than 30 years in Louisiana. 

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