Why Louisiana Stays Poor - YouTube

We want to examine the elements of a rich zip code and a poor zip code in Louisiana.

The rich zip code is home to 177 separate industries.

It produces $5.3 billion in economic activity each year -- higher than the GDP of 40 countries.

Now, I want to remind you.

I'm not talking about a state.

I'm not talking about a region.

I'm talking about a zip code.

It generates $3.9 billion in business profits per year -- the highest in Louisiana.

And it accounts for $12 billion in exports per year.

One zip code.

Now let's look at the poor zip code.

38.1% of residents live in poverty.

Median household income of $21,000.

Highest unemployment rate.

Highest murder rate.

The 2nd highest incarceration rate.

And the lowest life expectancy in East Baton Rouge Parish.

And you know what's the Louisiana paradox?

Guess what?

This is the same zip code: 70805.

Ladies and gentlemen, we can no longer pretend this is the best form of economic development.

As Edgar has joked in the past, we are just normal people presenting this information.

We're just average citizens.

That's an upgrade for me to be called normal and average.

But thank you very much.

I really appreciated the complement.

I think there's one thing we can agree on as citizens of Louisiana -- things are not

great.

We feel like we are a very poor state.

But I'm going to tell you about how we are an extremely rich state.

Louisiana is home to extraordinary wealth.

Louisiana ranks #2 in the nation in crude oil refining -- that's a quarter of the refining

in the entire nation.

Louisiana ranks #4 in the nation in natural gas production.

We rank #3 in the nation in chemical production.

Louisiana is a top 10 oil producing state.

Louisiana forms the heart of the nation's pipeline system.

This is how natural gas and other different, important resources are moving around the

country.

We are so central to the processing and moving of natural gas, the world price for natural

gas is set in Erath, Louisiana at Henry Hub.

Erath, Louisiana.

We could be considered the Silicon Valley for petrochemicals.

We’re also the center of the nation’s inland waterway system.

#1 in the nation for port tonnage.

We have 5 of the 15 top ports in our State.

We rank #1 in the nation in salt production.

Almost all of Louisiana is a salt deposit.

We rank #2 in the nation in sugar production.

#3 in the nation in rice production.

And Louisiana has ranked #1 or #2 in foreign direct investment every single year since

2008.

That means that more money is coming from around the world through Louisiana than almost

anywhere else in the country.

Now let’s see how others are faring.

Infant mortality, Louisiana ranks 46th 49th for poverty.

47th for household income.

47th for food insecurity.

50th in income gap by gender.

47th for property crimes 46th for violent crimes.

48th for reading scores.

Louisiana ranks 49th for math scores.

And 48th for life expectancy.

US News and World Report commissions an analysis every year using 75 different indicators.

Let’s see if we can find Louisiana.

We can scroll down.

It’s not 10th.

It’s not 20th.

It’s not 30th.

We are 50th – dead last in the country.

So we’ve heard about the wealth and natural resources we have in our state.

And we’ve also heard, what we already know, that we’re bottom of the list in all the

important categories when it comes to life indicators.

If Louisiana is so rich, why is it that we are so poor?

So we typically take it for granted that economic activity means individual, family, community

prosperity.

But how is that?

What is the connection?

It should be coming from two main vehicles.

Wages to families.

As well as public goods funded by taxes.

I’m talking about schools, libraries, the police, fire departments, infrastructure,

things of that nature.

So what would happen if one of those went away?

What if, even worse, the money that should be going into those public goods is instead

going in the opposite direction?

Is there something we’re doing differently in Louisiana?

Is something unique happening here that’s not happening across the country?

Let’s take a look.

This is a graph of all the corporate subsidies per capita for every state.

All the way to the left there’s a dotted line and that’s the national average ($291

per resident).

Then, if you can squint your eyes, you can see our neighbors in Texas ($89 per resident).

And, I’m sure you’ll be able to see it, there’s Louisiana – the big red line.

We are spending $2,857 per capita in corporate subsidies.

And about 80% of that is going to the industrial tax exemption program.

The difference is not *that* Louisiana has tax exemptions.

This is happening across the country.

The difference is how we’re doing them.

Louisiana is the only state in the nation that is giving a state-level board the authority

to grant tax exemptions for local entities’ property taxes.

“I’d like to welcome you to the Board of Commerce and Industry.”

So the dollars that should be going to the Metro Council, to the school board, to the

police – it’s a STATE-level board made up of people across Louisiana going into a

board room and saying “yes” or “no.”

“Is there anyone that would like to hear the details [laughter] of all of these.”

It turns out that is a very big deal.

Board Chair: “All in favor of approving these ‘en globo’?”

All: “Aye” “All opposed with a ‘no’?

… It’s really easy to give away other people’s

money.

Here’s a chart of all the requests in the last 20 years.

The little tiny line is who has been rejected.

The approval rate has been 99.95%.

There’s been no cost benefit analysis done in 82 years.

“Do they include the return on investment statement that is supposed to be part of these

according to the rules?

… Where?

Because I looked through, and I could not find it.”

So they’re rubber-stamping these, and they’re not going to see, “Okay, what are we gaining

for these?

Are there jobs?

Are we benefiting as a community from this investment?”

We don’t even know because we haven’t even looked.

ITEP is extremely expensive.

I think we can all remember the drama of the film tax exemption program just a few years

ago.

This program costs 10 times more than the film tax credits.

Just in 2017, $1.9 billion – billion with a “b” – was lost in revenue to local

taxing bodies.

$720 million was lost to Louisiana schools – 20% of their state and local funding.

That’s in just one year.

We’re using ExxonMobil as an example.

But I want to make clear – ExxonMobil, or any other company, is not doing anything that

is illegal or wrong.

They are doing things that are allowed.

So I don’t you to walk out of here saying, “That Exxon, they, they …” No.

It’s their fiduciary responsibility to minimize the cost to their industry.

It’s not on them.

It’s on us and our lawmakers to change it.

We have allowed this to happen.

Now, ExxonMobil has four major US oil refineries.

Let’s look at the Baton Rouge and Baytown (Texas) facilities.

They’re Exxon’s largest.

Baytown refines 561,000 barrels of oil per day – about 32% of Exxon’s total US production.

Baton Rouge refines 503,000 barrels of oil per day – 29%.

The property values at each refinery are also similar.

Baytown is valued at $2.8 billion, while Baton Rouge is valued at $2.2 billion.

In Baytown, Exxon’s taxable property is $2.5 billion, with 9% of its property value

exempt.

In Baton Rouge, the taxable property is $711 million – 67% of the total property value

is exempt.

Similar size.

Similar production.

Same company.

Different outcomes.

How does this affect our local tax base?

Baytown collects $48 million from Exxon’s refinery each year.

While Exxon’s East Baton Rouge refinery only pays $10 million.

$21 million, Baton Rouge is giving up.

That’s enough to give each school employee a $3,800 raise.

And that’s just one refinery.

And it’s one of four ExxonMobil facilities in East Baton Rouge, one of 59 industrial

facilities receiving ITEP exemptions in East Baton Rouge and one of 897 plants receiving

ITEP exemptions across the state.

So we want to look at this statewide.

We’re going to look at a few of the largest of those 897 plants.

First off, we have BASF in Ascension Parish.

The red line is the section they are *not* paying taxes on.

The green is what they are liable for.

So at BASF, 73% of their property value is off the rolls.

Also in Ascension Parish, we have Methanex.

99% is off the rolls.

I don’t think you can even see the little green sliver that they’re paying taxes on.

That is $7.5 million, or 1% of their total property value.

In Caddo Parish, we have Calumet – 89% off the rolls.

Which is $502 million.

In Cameron Parish, they have 2 multi-billion entities.

Cameron LNG is worth $11.7 billion.

And they are exempt from 99.99% of that.

The new World Trade Center in New York is one of the most massive projects in the world.

And that is $3.5 billion.

So this alone is worth nearly 4 times more than that.

And they’re paying a fraction of a percent.

Also in Cameron Parish is an even larger facility -- $12.8 billion.

And once again, they are exempt from 98.9% of that.

We have Calcasieu Parish, with Westlake Chemical – 77% off the rolls.

In Iberville with Shintech, 98.6% off the rolls.

That’s $1.84 billion.

In Orleans Parish, we have Folgers – they are 69% off the rolls.

In St. Bernard Parish with Chalmette Refining, 74% off the rolls.

In Rapides Parish, Procter & Gamble – we’ve all heard of them – 70% off the rolls.

West Baton Rouge, with Dow – 95% off the rolls.

In St. John the Baptist Parish, 88% off the rolls.

This is another multi-billion facility.

In St. Charles Parish, 91% exempt.

Another multi-billion plant.

In East Baton Rouge Parish, we brought it back.

Georgia Pacific, 67% off the rolls.

ExxonMobil, which we already looked at -- $1.45 billion off the rolls.

So across the state, between 66% and 99% of industrial property is perpetually exempted

from property taxes.

That means none of these companies across the state that are getting this program are

paying on any more than 1/3rd of their property.

So local governments stand on three legs: sales taxes (we’re all very familiar with

those), state and federal funds and property taxes.

When all of these corporations are exempted from their property taxes, we’re chopping

off a major portion of one of those legs.

And without that, we are left massively unstable.

If the property tax leg of the stool that you just saw had not been cut by the state

board, we would, in East Baton Rouge Parish, collect an additional $70 million per year.

$42 million per year is lost to police, fire, roads, parks, libraries, health and others.

$28 million per year is lost to public schools.

That would be enough to give every teacher a raise of $9,000 – or fully fund universal

pre-K.

In June of 2016, Governor Edwards, because of our research and involvement, signed an

executive order giving local taxing entities a voice in granting exemptions.

For the first time in 82 years, we have the opportunity to change things.

But you know, that executive order is meaningless and it won’t do anything unless we get involved

and we make sure it happens.