Economist: Industry tax exemptions not hurting parishes

The eight parishes that rank among the tops for giving 10-year industrial tax exemptions to chemical companies largely have business paying the overwhelming majority of property taxes and rank high for teacher salaries, an economist said Monday.

Iberville, Ascension, Calcasieu, St. James, East Baton Rouge, St. Charles, St. John the Baptist and Jefferson parishes all rank in the top 12 parishes for giving out the tax exemptions, which keep companies from paying property tax on new investments for a 10-year period, economist Loren Scott said. But at the same time, in every parish on the list except East Baton Rouge, businesses pay at least 80 percent of property taxes, he said.

Also, teacher salaries in all of those parishes, except Calcasieu, are well above the state average of $49,246. Iberville Parish, which had nearly $5.3 billion in 10-year industrial tax exemptions in 2011, has an average teacher salary of just over $60,000, the fourth-highest in the state. Other than Calcasieu, the parishes mentioned by Scott all ranked in the top 17 for teacher salaries.

Scott spoke to the Baton Rouge Press Club on Monday about a recent study he did for the Louisiana Foundation for Excellence in Science, Technology and Education (LaFeste) on the economic impact of the chemical industry.

LaFeste is a nonprofit organization established by the Louisiana Chemical Association.

Those parishes also are centers for employment in chemical, plastics and rubber manufacturing, Scott said. Calcasieu, Iberville, East Baton Rouge, Ascension, St. Charles and Jefferson parishes all had more than 1,500 residents working in the chemical industry during 2012.

“This is a big, big industry,” Scott said. In 2010, chemical exports from Louisiana were valued at $58.2 billion and accounted for 6.5 percent of the total chemical industry activity in the U.S. Only Texas, where exports topped $157.1 billion, and California, at $58.9 billion, had a greater impact. And Scott noted California is behind Louisiana, if plastics and rubber manufacturing are excluded.

Most of what is produced in Louisiana is considered base chemicals. When modern chemical manufacturers were setting up shop in Louisiana in the 1970s, Scott said, they made the decision to focus on base chemicals because of the ample supply of natural gas and oil; access to bodies of water, such as the Mississippi River, for shipping; and the state’s 10-year industrial tax exemption.

That ample supply of cheap natural gas is powering increased activity in the chemical industry. Scott said there are more than $50 billion in potential expansions on the drawing board in Louisiana.

“The industry is about to go off the charts,” he said.

Unlike earlier booms, this activity should go on for a while because of the ample supplies of natural gas in places like the Haynesville Shale in northwest Louisiana and the Bakken Shale in North Dakota. This has reduced natural gas costs in the U.S., while prices in Europe remain high.

The Louisiana Chemical Association hasn’t taken a stance on Gov. Bobby Jindal’s plans to eliminate state income and corporate taxes while raising state sales taxes and erasing scores of tax exemptions.

“There are a lot of industries putting pencil to paper to see how things will work out for them,” Scott said.