Schools
 

School board puts off decision to cancel tax exemptions that cost $3.7 million a year

The Orleans Parish School Board deferred a proposal Thursday to deny all applications from companies seeking a break from millions of dollars in property taxes that fund the city’s schools.

Board member Ben Kleban, who proposed the resolution, moved to defer it because the school board hasn’t gotten buy-in from the city.

“We need to hear the voice of our new mayor on this issue, because it does cross multiple government entities,” Kleban said.

The city and state use the Industrial Tax Exemption Program to lure manufacturers. The school board’s taxes account for about 30 percent of local property taxes, and therefore 30 percent of the tax break.

Kleban said the city and the schools need to “try to develop a shared vision on this.”

If the board approves the measure, revenue from opting out of the exemption will go to public schools in New Orleans. That could include an expansion of early-childhood education for children three years old and under.

Ken Ducote, executive director of the Greater New Orleans Collaborative of Charter Schools, argued that voters approved local taxes with the understanding that everyone would pay.

“Having waivers … creates an inequity,” he said.

He said the district expects enrollment to increase, including larger numbers of students with special needs who cost more to educate. “We need to make sure we maximize the funding sources that we’ve already approved,” he said.

According to Kleban’s proposal, 12,000 low-income families in the city don’t have access to quality, affordable early-childhood education programs.

The industrial tax exemption is the state’s most expensive tax incentive. It cost local governments $13.7 billion in lost revenue between 2006 and 2016, according to The Advocate.

Since 2000, government bodies in New Orleans — including the school board, the city and the public library system, among others — have lost out on $210 million in taxes due to the program, according to Kleban’s proposal. That includes $68 million for New Orleans schools.

Until 2016, the program exempted 100 percent of local property taxes for certain manufacturers, for up to 10 years. Applications were approved by a state board, without local input.

Gov. John Bel Edwards revamped the program that year, requiring a vote by local governments before the exemptions can be implemented and shortening the tax exemption.

Now the exemption is good for five years at 100 percent, with an option to renew it at 80 percent for up to three years.

According to The Advocate, earlier this year the Caddo Parish Sheriff’s Office was the first local agency to reject an industrial tax exemption request.

Together Louisiana, a group of religious and civic organizations, has lobbied local government bodies to opt out. It estimated that the tax break reduces revenue to New Orleans schools by about $3.7 million a year.

The blanket denial by the school board would apply only to new requests and renewals, not those already granted.

In an interview earlier this week, Broderick Bagert, a lead organizer of Together Louisiana, said revenues for schools would increase by about $740,000 the first year — 20 percent of the $3.7 million — and about half of that the following year.

It would take several years for all the tax exemptions to expire, he said.

“We do not believe that giving these exemptions to these companies will serve the better interest of the community,” said the Rev. C.S. Gordon, who said he came to the meeting on behalf of Together New Orleans, the local chapter of Together Louisiana. “This is a history-making decision for our community.”

Kleban originally intended to tie the revenue to an expansion of early-childhood education. But he changed his mind because revenue would increase gradually. And he didn’t want to commit all the money to expand early-childhood education, citing a recent surprise shortfall in K-12 funding.

Tuesday, the board’s budget and finance committee rejected a separate proposal from Kleban that would have committed funding to expand early-childhood programs.

Kleban called for a one-time commitment of $3 million from the district’s reserve fund for the early-childhood education effort. But speakers at Tuesday’s meeting said they were worried that there was no specific plan for the funds.

Thursday, the board approved a substitute resolution that creates a working group to develop a long-term strategy for the program.

The group must present its recommendations by October, which Kleban praised as an “aggressive timeline.”

He said he was optimistic that the group could come up with a plan that could do more than a one-time allocation.

“Though this isn’t the same as my original proposal,” he said, “it has the potential to be even bigger.”

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About Charles Maldonado

Charles Maldonado covers the city of New Orleans and other local government bodies. He previously worked for Gambit, New Orleans’ alternative newsweekly, where he covered city hall, criminal justice and public health. Before moving to New Orleans, he covered state and local government for weekly papers in Nashville and Knoxville, Tenn.