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|Who's going to pay?|
The top 25 property tax payers in Ouachita Parish will pay almost a third of the $15 million incentives package local officials pledged to aid V-Vehicle Co.'s plans to establish a manufacturing operation here.
That's according to the Ouachita Parish Tax Assessor's office.
The $15 million incentives package entails contributions from the cities of Monroe and West Monroe, the Ouachita Parish Police Jury as well as Ouachita Economic Development Land Corp. The two cities and the police jury are responsible for some $13 million of the $15 million incentives package. OEDC Land Corp. is on the hook for $2 million.
To pay for their share, the cities and the police jury are asking parish voters to approve a 1.8-mil property tax in the Oct. 17 election. The proposed tax could be levied for no more than 15 years. Officials have said the tax most likely would be levied for about eight years.
The $15 million incentives package represents a small portion of the incentives V-Vehicle secured to choose the former Guide plant as the site for its manufacturing operation. The state initially pledged some $80 million toward the V-Vehicle project. In time, the state's contribution will total some $130 million in incentives.
Meanwhile, V-Vehicle applied for a more than $300 million loan from the Department of Energy to assist its plans in producing fuel efficient automobiles. The loan application was filed with the Energy Department's Advanced Technology Vehicles Manufacturing Program, a $25-billion program that assists companies in producing low-emission, high mileage vehicles.
Monroe Mayor Jamie Mayo said local officials had little choice "when the call came" seeking assistance from local governments to provide incentives for V-Vehicle to locate in Ouachita. He said local officials had to move quickly to pledge incentives to secure an agreement with V-Vehicle officials.
At that time, Mayo said no one was sure where the money would come from to pay for a local incentives package. Mayo, though, said officials did not take lightly the decision to place a property tax proposal on the Oct. 17 ballot for parish voters to decide.
"We're not jumping up and down celebrating the decision to assess a tax on business or anybody," said Mayo. "But when we were given the chance to get 1,400 direct jobs and 1,800 indirect jobs, that was the best decision given the time element."
University of Louisiana-Monroe economist Bob Eisenstadt said the proposed property tax is an investment in the future economic health of the region.
"Sometimes you've got to spend a buck to make a buck," Eisenstadt said.
Eisenstadt said he appreciated the expense that would be incurred by existing businesses, but he said the benefits often outweigh the costs.
"We're talking about a major economic development opportunity in the area," Eisenstadt said. "I understand there are probably plenty of businesses that will be disproportionately affected and upset by it."
Eisenstadt pointed to the possibility of a $56 million annual payroll V-Vehicle would produce if the company becomes operational. He said the economic benefits generated by the V-Vehicle payroll would more than justify the $15 million local investment. That's the case, according to Eisenstadt, because 45 cents of every payroll dollar generated by V-Vehicle would circulate throughout the retail community.
"That's a significant economic boost, something we haven't seen around here in a few years," Eisenstadt said.
If voters approve the property tax proposal Oct. 17, some of the region's largest employers will be on the hook for more than one-half of the tax bill.
Records at the Ouachita Parish Tax Assessor's office show that the 25 largest property tax payers would contribute almost $400,000 per year to pay for the local obligation for V-Vehicle. That accounts for some 28 percent of the $1.4 million the proposed property tax would generate annually.
Among the employers that would take a financial hit for the V-Vehicle incentives package are West Monroe's Graphic Packaging, Sterlington's Dow Chemical Co. and Monroe's CenturyLink, formerly CenturyTel.
Graphic Packaging alone would see its total tax bill increase by almost $80,000 per year, or $1.2 million over the course of 15 years.
Dow Chemical would see its property taxes jump by $18,000 per year for its Angus Chemical division in Sterlington.
CenturyLink would pay an additional $256,000 over the next 15 years, if voters approve the property tax.
Also, Entergy's annual property taxes would rise by about $55,900 per year, while Glenwood Regional Medical Center's would rise by about $12,250.
Ouachita Parish police juror Charles Jackson downplayed the significance businesses would pay if property tax rates rise by 1.8 mills. He said Ouachita Parish pays substantially less property tax than most other parishes in the state.
"The only parish in our peer group that is substantially lower is Lafayette, and they have consolidated government," said Jackson, who chairs the police jury's finance committee.
Jackson also pointed out the statewide average assessment in 2008 was 105 mills. Ouachita Parish topped out at 95 mills last year.
Also, Jackson noted businesses throughout Louisiana pay more property taxes than homeowners.
"Statewide, businesses carry a burden on property taxes anywhere from 75 to 87 percent, depending on the parish," Jackson said.
If Ouachita voters do not approve the proposed property tax, Jackson said the cities and the police jury would still owe their share of the $15 million local incentives package.
"I think this is something the voters really need to look at and understand," Jackson said. "I'm supportive of this and of doing what we have to do to bring this plant in."
Police Jury president Shane Smiley said the property tax was "the only option" available to pay for the incentives package.
"There was a lot of discussion at a lot of meetings that went into this before we decided to do a property tax," Smiley said. "Based on the amount of time we had to get the money and to pay off the bonds, the property tax was the viable option."
Smiley said there were some discussions about levying a sales tax. He also said levying a franchise fee was mentioned. Those proposals were dropped because not enough time was available to levy a sales tax or a franchise fee to satisfy an agreement with the state and V-Vehicle.
Jackson said he has most often heard about the sales tax option. He said many of the area's biggest taxpayers are utility companies or oil and gas companies. Those taxpayers will simply pass the taxes to consumers in other markets, Jackson said.
"Fifteen to 20 percent of this tax will be done like a sales tax or paid by people outside the parish," Jackson said.
Jackson was referring to companies such as Gulf South Pipeline, which would pay about $18,000 per year in additional taxes if the property tax is approved. Since Gulf South is an energy company, it most likely would pass the tax on to the end users of the natural gas pumped through pipelines in the parish. Similarly, Centerpoint Energy would pass its $18,720 share of the annual tax onto its customers as well.
Jackson said there are 10 companies in the list of the top 25 business taxpayers in Ouachita Parish like GulfSouth and Centerpoint Energy.
Whether voters vote for or against the new property tax assessment, Mayo said one thing was clear.
"We're on the line," Mayo said. "The commitment has been made."
The $15 million incentives package is split three ways among the cities of Monroe and West Monroe and the police jury.
West Monroe must contribute 20 percent of the funds. The police jury is tapped for 30 percent, and the city of Monroe will pay some 45 percent of the money. The remaining 5 percent will be contributed by the OEDC Land Corp.
Mayo said regardless of what voters do, the governments will pay their share.
For Jackson, the tax proposal is about more than paying for the incentives package.
"If we don't do something different, we'll never be different," Jackson said. "If we don't change the way we do things, things will never change."