Millions could be lost with tax credit cut in SCP

With St. Charles Parish being the second largest collector of inventory taxes in Louisiana, officials are bracing for the impact of a 25 percent cut in the state’s tax credit or reimbursement to the companies that pay them on the local level.

Parish Assessor Tab Troxler said he expects a potential $6 to $8 million loss in tax collections from the potential combined effect of companies dealing with the cut by keeping smaller inventories, as well as the inventory itself, such as petroleum products, having less value in today’s market.

Troxler projected an impact on next year’s tax collection.

“This could cause the taxpayer to lower inventory to compensate for the difference in the credit,” Troxler said. Additionally, if oil prices continue to decline, the inventory on hand would have less value to tax, he said.

The parish’s heavy industrial tax base ranks it as the eighth largest tax roll in the state in value, he said.On the state level, Gov. Bobby Jindal had made eliminating the tax credit the focal point of his plan to address the budget crisis with a projected $1.6 billion deficit next year. But the state House Ways and Means Committee drastically amended the measure to only reduce the credit.

Louisiana businesses pay a tax on all inventory to local governments and schools, but the state has 100 percent reimbursed these companies – biggest payers have been oil refiners and other heavy industries – for the last two decades. Last year, the tax credit cost $452 million.

Reducing the credit to 75 percent credit is expected to bring back $100 million a year into state coffers.

Statewide, parish officials, including those in St. Charles Parish, opposed eliminating the credit and the tax. They strongly lobbied to protect both measures.

Despite the credit reduction, Troxler projected the parish’s property tax collections would remain stable and even slightly increase by 2017, provided legislators don’t eliminate the inventory tax and/or credit. If they do, he estimated the tax roll would fall by 20 percent and that would be a big factor in the outlook.

Industrial exemptions have taken $5 billion off the parish’s tax rolls although Troxler said they have lured growth such as Monsanto’s proposed $1 billion expansion in Luling. The Louisiana Board of Commerce and Industry allows these exemptions, which he questioned does not have local representation.

“The consequence of that, if taxes were collected on all this, our tax rate would be half,” he said.