La. schools to limit corporate tax exemptions

La. schools to limit corporate tax exemptions

(La.) Public schools in New Orleans can expect to see an additional 43 million in funding next year thanks to the closure of generous commercial tax breaks.

Under an executive order issued by Gov. John Bel Edwards in 2016, local government agencies—including school boards—were given new authority to reject proposed exemptions from property taxes.

The exemption program, established in the wake of the Great Depression to attract new businesses to the impoverished parts of Louisiana, has in more recent years become viewed as a detriment to public services.

According to Together Louisiana, a coalition of religious and civic organizations, the exemption program has resulted in some 1,400 companies avoiding close to $20 billion over the past 20 years.

In Orleans Parish alone, the cost between 1998 and 2017 has been more than $210 million. According to Together Louisiana, the total number of jobs created in Orleans from the program during the study period netted a loss of 76 positions.

Control over the exemptions had rested with a state agency, which had a long record of granting the requests. Today, more government bodies are setting a higher standard for approval.

Late last month, the Orleans Parish School Board adopted a new set of rules that apply public benefit tests that businesses will have to meet:

  • The surrounding neighborhood where the business is located must have residents who earn less than the state’s average household income;
  • The jobs created by the exemption must meet the requirements of the state’s economic development program—the Louisiana Quality Jobs Rebate program; and
  • At least 35 percent all of new hires must live in New Orleans.

The policy change is expected to generate $10.6 million for public services, including $3 million for the school district.

Devastated by Hurricane Katrina in 2005, oversight of the public schools in greater New Orleans was split between state management and any local school board that survived intact after the storms and floods.

That division came to an end on July 1, when the 37 schools in the Recovery School District rejoined the 41 under the local board's control.

The large number of charter schools in the city retains their independence.

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