Amendment 5 On The 2020 Louisiana Ballot: What To Know About Manufacturing Facility Tax Incentives

Oct 6, 2020

Here’s the language you’ll see on the ballot:

“Do you support an amendment to authorize local governments to enter into cooperative endeavor ad valorem tax exemption agreements with new or expanding manufacturing establishments for payments in lieu of taxes?”

How would it work?

It would allow for certain energy and manufacturing facilities to make direct payments to local governments instead of paying property taxes.

The payments can be used by local governments for a variety of purposes, including operations or to service bonds for public infrastructure projects. These arrangements would be completely voluntary.

Louisiana already has a tax incentive program to encourage economic development, called the Louisiana Industrial Ad Valorem Tax Exemption Program (ITEP,) which provides an 80 percent property tax abatement for an initial term of five years and the option to renew for five additional years at 80 percent property tax abatement. This amendment would create a new, optional tool for local governments to negotiate a more “front-loaded” funding schedule for local needs without having to wait out the eight- or 10-year ITEP period.

Who’s for it and who’s against it?

The Louisiana School Board Association, the Police Jury Association, the Louisiana Sheriff’s Association and multiple business organizations support this amendment.

According to the nonpartisan Public Affairs Research Council, assessors generally oppose the amendment because they worry it will be more generous than ITEP.

Community groups, such as Together Louisiana, a grassroots coalition of 250 religious congregations and civic organizations, also strongly oppose the amendment, saying it gives preference to private businesses and would result in less funding for education and infrastructure because it will allow local politicians to negotiate the terms of tax payments.

Critics argue that it may incentivize short-term gains over long-term planning for local municipalities. Local governments will receive less tax revenue, which could lead to spending cuts or an increase in taxes.

To learn more about what's on your 2020 ballot, check out our ballot guide.

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