Parish Council denies industry tax exemptions

Published 12:00 am Saturday, November 30, 2019

Council members, perhaps buoyed by residents present at the meeting, voted 8-0 to deny tax exemptions to Nalco Company and Marathon Petroleum this past Tuesday night.

“It’s something we didn’t expect,” Nalco plant manager Jim Kulesa said. “I think not just Marathon (but), others in St. John are going to have to strongly consider future expansion.”

He said the company is currently considering a $30 million expansion at the Garyville plant and although a decision will not likely be made until late 2020 or early 2021, the council’s vote could potentially be a game-changer and have a significant negative impact council members did not foresee.

“If the system is going to stay the way it is today, I think it can potentially jeopardize the expansion,” Kulesa, a member of the St. John United Way board and active community member in the parish, said. “Just do the math. For us to put in capital projects under the construct that we had a tax exemption for years and now all of a sudden it’s getting denied by the local community is certainly a change.”

Nalco was seeking an exemption on a piece of equipment worth $8.5 million. Denial of the exemption will funnel an additional $90,000 annually into parish coffers in the next 10 years.

Bruce Fatherfee, a consultant for Nalco, said the company pays an estimated $1.7 million annually in parish taxes, a number that has nearly doubled since 2011.

A recently enacted policy by Gov. John Bel Edwards has changed tax exemptions from 100 percent to 80 percent, a decision Kulesa sees as a “stepping stone.”

“I think the tax exemption was put in place to expand the businesses so that we can expand contributions to the St. John community and the parish,” he said “When the exemptions go away, management is going to have to further evaluate.”

Marathon Petroleum was seeking an exemption for $25 million. Although no Marathon representatives attended the meeting, a report from the company provided to the parish that was obtained by L’OBSERVATEUR revealed the company has paid in excess a combined $60 million in property taxes for 2016, 2017 and 2018. Marathon’s tax liability will increase substantially in 2020 when the Garyville Major Expansion, a project that has resulted in additional jobs at the refinery and other benefits to the state, comes off exemption. The report also noted that Marathon has been a “good corporate neighbor” by sponsoring local events, including the annual Andouille Festival, and that the company’s 900 employees are traditionally the parish’s largest United Way donor.

“I am concerned about the message being sent to existing and potential industry partners,” outgoing parish president Natalie Robottom said. “The financial health of the parish is heavily dependent upon a good working relationship with business and industry, and it is imperative that decision-makers avail themselves to all available data when making such decisions.”

Several parish residents voiced their opposition to the exemptions at the beginning of the meeting. Much of their opposition stemmed from the belief that by denying exemptions more money would be available to address the myriad of needs, including drainage, aging water systems and deteriorating infrastructure facing St. John. Hiring practices of employing local residents were also called into question. Those sentiments were endorsed by council members, who painted a bleak picture of the parish and its livability for residents.

“We should not give tax breaks when we are all suffering,” councilman Marvin Perrilloux.

Outgoing Councilwoman Julia Remondet, who lost in her bid for re-election in October, said after having served on the council for the past four years, she has “never known this parish to need money more than it needs it now.”

“We are in dire need,” Remondet, who has previously worked for economic development in the parish, said. “The things we do need to fix are the reasons why so many people, when they get ahead, are moving out. The things we need cost money; it’s everyday things, water, drainage, pipes. We need so much.”

Councilman Lennix Madere said although the region is considered the tri-parish area conceded he is “not concerned” about St. Charles or St. James parishes, adding those parishes “have to take care of their own,” he added. Regarding any potential pushback from the plants, Madere said, “they’re not going anywhere,” a statement Kulesa did not address.

Robottom applauded the residents for taking an active role in the process and said they raised some legitimate concerns. However, she said some residents mischaracterized the exemption process and the dollars involved.

Kulesa noted the $8 million piece of equipment is installed and operational, as required by state law, which says equipment must be in use before filing for an exemption.

“It’s backwards; we were expecting to get this approved because that’s the way the law is written,” he said.

Richard Meek is a contributing writer to L’OBSERVATEUR.