Oil usually reigns supreme in Louisiana. Since 2008, industry titan Exxon Mobil alone has received $381 million in tax subsidies at the state and local level, second only to those it received in Texas, the oil capital of the U.S. and home to Exxon’s headquarters.
It seemed like a foregone conclusion, then, when a slew of new breaks Exxon requested under the Pelican State’s Industrial Tax Exemption Program, known as ITEP, came up for approval in East Baton Rouge in October.
East Baton Rouge’s public-school teachers, however, had other ideas. They may emerge victorious in a fight against one of America’s largest companies in one of the most-industry friendly states in the country.
Louisiana is one of the poorest states in the U.S., with an education system ranked near the bottom as well. It’s also one of the most prolific granters of corporate tax incentives – which generally lower tax payments for companies if they move operations, build new facilities, or invest a certain amount of money in a particular location – trailing only New York in the total amount it hands out. Per capita, Louisiana grants the most corporate tax incentives in the country by far.
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Louisiana law, like that in many states, says that the legislature must pass a balanced budget, meaning every cent that gets spent on corporate tax incentives or other giveaways to big businesses is a cent that can’t wind up going toward the other things for which the government is responsible, including education. According to a recent report from Good Jobs First, an organization that tracks corporate tax subsidies, school districts in the U.S. lost a collective $1.8 billion due to corporate tax abatements last year.
Citing the connection between budget struggles in their district and the giveaways local officials kept approving, East Baton Rouge’s teachers formally voted to stage a one-day walkout in October if the tax breaks for Exxon were approved. 2018 saw teacher walkouts across the country that brought attention to low pay, shrinking budgets, and other ills of the public education system; Baton Rouge added the effects of corporate giveaways on public schools to that list.
“You don’t have enough money to give us a raise, we’re below pay in terms of across the nation, and now you’re going to cut the budget, but you want plants and industry such as Exxon to get tax money?” said Angela Reams-Brown, president of the East Baton Rouge Federation of Teachers, when asked why the district’s teachers turned their ire on these tax breaks.
She added that teachers and support staff in her district haven’t received a pay increase in 10 years – which means that once inflation is factored in, teachers there have seen a pay cut of $8,500 since 2008 – and that they are losing instructors to other cities and states that pay better. Plus, she said, special education classes in East Baton Rouge are rationing paper to get through the year.
“We’re taking on Exxon now, but our fight is with any industry who wants a tax exemption from education. Public education can’t afford to pay the taxes of big industries such as Exxon and Shell and others in the state of Louisiana,” she said.
The threatened walkout garnered enough attention to convince the Louisiana state Board of Commerce and Industry, which oversees ITEP, to push back an initial vote on approving the breaks to last week. Alas, the state board formally gave Exxon approval for $6.6 million in tax breaks over five years (after Exxon pulled some of its applications on its own).
But that’s not the end of the fight: Thanks to a change in procedure initiated by Democratic Gov. John Bel Edwards in 2016, local government bodies, including school boards, also need to approve the portion of the tax exemptions that directly affects them. The East Baton Rouge school board will get that chance in the next few months.
East Baton Rouge’s teachers and local activists are confident that they can head the giveaways off at the pass. Reams-Brown confirmed that the walkout threat from the teachers still stands if the school board OKs the new tax breaks and said the teachers union will flood the meeting at which the vote will occur. “We plan to be there in full force,” she said.
“It’s going to be a high-noon moment where we see what the priorities of those officials are,” said Broderick Bagert, lead organizer of Together Baton Rouge, which is also opposed to the tax breaks Exxon requested. “We’re feeling like the level of awareness and understanding now is totally different from anything that’s happened in the past.”
The local business lobby, of course, is decrying the campaign to stop the tax breaks as “pressure from groups using this process to advance their own political agenda.”
It makes sense that schools would be one of the government entities most susceptible to losing money due to corporate tax breaks, since many of those breaks are on property taxes, which are also America’s primary way of funding public education for some reason. The Good Jobs First estimate of $1.8 billion is almost certainly an undercount: Though school districts are supposed to report how much they lose each year due to tax breaks, many don’t.
Of the places that have reported how much money their schools lose, Louisiana is once again near the top of the list, trailing only New York and South Carolina, according to Good Jobs First. Three of the five most affected school districts in the country are located within the state. East Baton Rouge alone lost $17.5 million in the last fiscal year, more than it would cost the district to implement universal pre-K.
Adding some insult to injury, the tax breaks Exxon wants are for plants that are already built; the money isn’t even an incentive anymore, since the work is done, merely a pay out that the company is asking for because it can.
Loads of research has shown that corporate tax incentives don’t actually do what their advocates claim; they simply give big corporations money for shuffling jobs around the country or making investments they would have made anyway. These incentives lead cities and states into a race to the bottom, allowing corporations like Amazon to ignite bidding wars that only benefit shareholders’ bottom lines. According to The Advocate, an East Baton Rouge newspaper, Exxon has received tax cuts worth some $700 million there in the last 20 years, while cutting 1,900 jobs.
East Baton Rouge’s teachers are rightfully saying “enough,” and may even do what loads of other activists have been unable to: Stop a corporate giveaway in its tracks.