New Orleans City Council rejects multimillion-dollar Folgers tax breaks
19th January 2021 · 0 Comments
By Michael Isaac Stein
The Lens
The New Orleans City Council voted unanimously on last Thursday to reject four multi-million dollar property tax breaks for Folgers Coffee Company. The rejections come a month after the council shot down another two tax break applications from Folgers.
Folgers had applied for all six tax breaks through the state’s Industrial Tax Exemption Program, which allows companies to skip out on paying up to 80 percent of the taxes owed on new property investments in the hopes of attracting new businesses and expanding existing operations. Together, the six applications could have cost the city $25 million if approved for the full ten-year lifespan.
The six Folgers applications became the target of public outrage last year in light of the city’s dire economic crisis, rising residential property taxes and another group of commercial tax breaks granted last year by Orleans Parish Assessor Erroll Williams that will cost the city an estimated $42 million in 2021.
Among critics’ frustrations were that all six projects on the applications were either already completed or under construction. There was no reason to incentivize projects that the business had already committed to, they argued.
Folgers representatives argued that the Industrial Tax Exemption Program, or ITEP, was part of their decision to consolidate roasting operations in New Orleans a decade ago, and that the council’s decision on these applications could inform future decisions about where to invest their money.
Council members were sympathetic to Folgers, but said that ultimately, the city simply couldn’t afford to give up any revenue right now as the city continues to struggle with the coronavirus and related economic crisis.
“Today I am voting to deny the four remaining ITEP applications submitted by Folgers, not because of the company, but because of the financial crisis our city is facing at this time,” said Councilwoman Cyndi Nguyen. “These funds will be used to restore our city budget and continue to provide vital services to our residents, especially public safety.”
The Industrial Tax Exemption Program, or ITEP, has long been controversial because while it is administered by the state, property tax cuts primarily affect local governments. In 2017, The Advocate reported that the program cost local governments more than $1 billion every year on average from 2000 to 2016.
And traditionally, local taxing bodies — including city governments, school boards and sherriffs offices — had no say in the matter. On top of that, the state almost never rejected ITEP applications.
But that’s changed in recent years, and local taxing bodies now have the ability to veto the ITEP tax breaks even if the state has approved them.
Last Thursday’s City Council vote puts the council in line with The Orleans Parish School Board which already rejected all six applications last month.
Several council members on Thursday also spoke broadly about the need to take a more comprehensive look at the city’s property tax exemptions. Council members Jay Banks, Joe Giarrusso and Kristen Palmer all brought up the city’s policies around nonprofit exemptions. They also discussed the idea of a parcel fee that would force every property to pay some amount to the city, even if it was exempted from general property taxes.
“While Folgers is the topic right now, this requires that we take a comprehensive look at all of the property tax exemptions,” Banks said. “Where it stands now, and depending on who you talk to, anywhere from half to one third of the properties in Orleans Parish pay no property taxes. That puts an inordinate amount of pressure on those of us who are paying property taxes, specifically home owners and residents who are struggling to stay here.”
The above article originally appeared in The Lens on its website (www.thelensnola.org). The Louisiana Weekly enjoys a partnership with The Lens.
This article originally published in the January 18, 2021 print edition of The Louisiana Weekly newspaper.
