Parish to forego $2 billion
Deal may have violated La.’s public meetings law
<p class="indent">Elected officials with the Calcasieu Parish Police Jury, School Board and Sheriff’s Office recently approved a motion to not collect more than $2 billion worth of industrial property tax over the next 10 years as an incentive to bring Driftwood LNG, a $15.2 billion subsidiary of Tellurian Inc., to Southwest Louisiana.
<p class="indent">If approved by Gov. John Bel Edwards later this week, Driftwood’s participation in the Industrial Tax Exemption Program, an 80-year-old, stategoverned business incentive program, will be one of the largest corporate tax exemptions in U.S. history.
<p class="indent">Each entity approved the motion unanimously in early November, with little debate. They agreed to forego hundreds of millions of dollars in collections for their respective entities and, ultimately, over $1 billion in collections for the entire parish. If local governments required Driftwood to pay only 1 percent of its estimated $2 billion, 10-year property tax bill, public revenues would see an increase of $20 million.
<p class="indent"><strong class="tag TTL"><span style="font-weight: bold;">Unlisted information</span></strong>
<p class="indent">Public agendas did not mention the exact figures, estimates, calculations and studies concerning the total cost of the property tax exemption. Instead, each entity published a “unified recommendation” drafted by the Calcasieu Parish Taxing Authority-ITEP “group.” It listed only the 200 jobs and $34.3 million in payroll to be created at the project site; the terms of the five-year exemption contract; the percentage of property eligible for the Industrial Tax Exemption Program (100 percent); and the loss of exemption amount for industry non-compliance (100 percent).
<p class="indent">At the CPSB meeting, Wilfred Bourne, chief financial officer, mentioned the positive sales tax effect industries have on the local economy and explained how the taxing authority does a long-range analysis before bringing the issue to the boards.
<p class="indent">Richard “R.B.” Smith, vice president of business and workforce development for the SWLA Economic Development Alliance, told board members that ITEP approvals, such as Driftwood’s, are necessary for the region to remain competitive with other states because Driftwood hasn’t made a final decision.
<p class="indent">“This is not a slam dunk,” Smith said.
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<p class="indent">After questioning staff about the missing documentation, District 8 School Board member Eric Tarver reminded Bourne that local officials need the full scope of information in order to make the best decisions.
<p class="indent">“The last time we did one of these things I asked to see that information that you just went over,” Tarver said. “It’s never in these packets. What’s not in there is how much property tax we are exempting and how much sales tax we are expecting to gain. Every time we have one of these (ITEP applications) we need to have those numbers included with the recommendation.”
<p class="indent">According to the taxing authority’s most recently revised rules, local elected officials are not permitted to attend the group’s closed meetings. The “Steps” section of its 14-page “Process and Rules” document essentially bars elected officials and the public from ITEP application deliberations. It states the meetings “will be private, with only members of the designee group and the facilitator present.” Company representatives can attend, if invited, and all group discussion is strictly confidential.
<p class="indent">Most elected officials told the <span style="font-style: italic;">American Press</span> they were in the dark for much of the local ITEP process, including the final total of $2 billion not collected.
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<p class="indent"><strong class="tag TTL"><span style="font-weight: bold;">Taxing authority</span></strong>
<p class="indent">The taxing authority was created about one year ago in response to a June 24, 2016, executive order by the governor that gave local government a voice concerning if and/or how much of a tax exemption it was willing to grant a prospective industry. The executive order and its subsequent revisions authorize local governments to grant exemptions anywhere from zero to 100 percent and with eight- to 10-year term limits, depending on when the initial application was filed.
<p class="indent">According to Louisiana Economic Development public records, Driftwood’s project is subject to the “Post Executive Order 2016” rules, giving locals the authority to grant two, five-year exemptions, up to 100 percent.
<p class="indent">For more than 80 years, residents had no say in the forfeiture of property tax in efforts to attract industry to the state. Edwards labeled the previous practice a “competitive disadvantage” in his executive order. Gary Perilloux, communications director for Louisiana Economic Development, said the clause references the disadvantage the state faced when local governments had no voice in the process and could not “exercise discretion in granting property tax exemptions for manufacturing projects.”
<p class="indent">Bourne, Sharon Cutera, the Sheriff’s Office chief financial officer, and Tammy Bufkin, Police Jury director of finance, each said they were approached by the SWLA economic development alliance concerning the creation of a group that would help streamline the local ITEP application process.
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<p class="indent">“We developed (the taxing authority) in collaboration with them from the standpoint of, for 81 years the state had done all of the analysis, all of the front-end work,” Smith said. “What we wanted to do was to bring our local taxing authorities together. We needed to make sure that there was a way that these businesses could see a clear pathway towards getting that decision made.”
<p class="indent">Smith said the alliance attends the taxing authority meetings “for information purposes only.”
<p class="indent">The alliance, an organization supported entirely by local business and industry, serves partly as a liaison or conduit of information concerning ITEP applications, according to George Swift, alliance president and CEO.
<p class="indent">“We weigh in, make recommendations and present the facts about the project to the local jurisdictions,” Swift said.
<p class="indent">Local governing boards unanimously approved the creation of the taxing authority, along with its rules and procedures, in 2017 and earlier this year.
<p class="indent"><strong class="tag TTL"><span style="font-weight: bold;">Meeting law</span></strong>
<p class="indent">Taxing authority members have no official vote concerning an industry’s ITEP application and only serve as advisors to local officials. Despite having a rules and process document, the authority considers itself an “informal workgroup” or a “staff meeting” of various entities, and not an official committee subject to open meetings law.
<p class="indent">“It’s not really a closed meeting,” Smith said. “It’s a staff meeting. How many staff meetings have a public audience?”
<p class="indent">Keeping the meetings confidential protects the highlycompetitive projects being vetted, Smith added.
<p class="indent">“These are publicly traded, highly regulated companies,” he said. “It’s confidential on the front end to ensure the competition is not spying on them.”
<p class="indent">Don Pierson, Louisiana Economic Development secretary, confirmed that each local government has the authority to create an advisory board, such as the taxing authority. Perilloux added that, as with any other decision, public bodies should “follow their own guidelines” when making decisions “in accordance with pubic meeting law.”
<p class="indent">According to the Attorney General’s website, citizens’ advisory committees that are authorized or appointed by a public body are “also subject to the open meetings law even if the committee has no member of the main public body on that committee.”
<p class="indent">Attorney General Jeff Landry said his office could not issue an “official statement” on Calcasieu’s ITEP process as it only does so through an official AG opinion request. Rather, it provided three separate opinions, spanning 25 years of Louisiana constitutional law, on similar cases where appointed private “citizen advisory councils” were required to comply with open meetings law.
<p class="indent">The taxing authority’s failure to comply with open meetings law may explain why the many elected officials claimed to be unaware of much of the local ITEP process.
<p class="indent">Elected officials have the right to attend meetings of public interest even if certain matters are confidential. State law allows public bodies to discuss specific confidential matters privately, with elected officials present, during an executive session.
<p class="indent">The industrial tax exemption is estimated to bring record-breaking sales tax revenue to Southwest Louisiana throughout Driftwood’s $15.2 billion construction phase. A lack of public input means that residents parishwide will pay $10 million per job to bring the company’s final 200 permanent jobs to Southwest Louisiana.
<div class="Lead"><strong>According to the taxing authority’s most recently revised rules, local elected officials are not permitted to attend the group’s closed meetings.</strong></div>
<div class="float"><div class="Lead"><span style="font-weight: bold;">Richard “R.B.” Smith, SWLA Economic Development Alliance, told board members that approval, such as Driftwood’s are necessary for the region to remain competitive with other states.</span></div></div>