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Panel Delays Incentives On LA Fuel Plant

Mon, 08/12/2013 - 10:10am
Kevin McGill, Associated Press

NEW ORLEANS (AP) — A legislative committee delayed approval Friday of an incentive agreement for a huge fuel plant planned for southwestern Louisiana, with some members complaining they don't have enough information about the cost of tax incentives used to attract the facility.

The Joint Committee on the Budget's decision to delay approval until its next meeting — expected in two weeks — was a setback for Stephen Moret, economic development chief for Gov. Bobby Jindal. Moret said the postponement sends the wrong message to South African energy company Sasol Ltd., which has spent millions on the project, and to other industries that might look to locate or expand in Louisiana.

"I recognize sending out a bad message to industry. I understand that. I also recognize sending out a horrible message back to my constituents that I just decided to totally abdicate my responsibility," Sen. Robert Adley, R-Benton, said during the meeting, which was held at the Capitol in Baton Rouge and streamed live on the legislative website.

Adley made the motion to delay approval of an agreement needed to advance the Sasol project — a multi-phased multi-billion dollar project that includes development of a plant to turn natural gas into chemicals, diesel and other fuels.

Also caught up in the delay was a Lockheed-Martin project to build fuel tanks at NASA's Michoud assembly center in eastern New Orleans, which was not debated.

The committee did approve an agreement advancing plans for Benteler Steel/Tube Manufacturing Corp.'s tube mill at the Port of Caddo-Bossier.

But that was followed by a discussion by committee members — notably House and Senate budget chairmen Rep. Jim Fannin, R-Jonesboro, and Sen. Jack Donahue, R-Mandeville — about the difficulty in assembling annual budgets when the cost of some state incentives are not known.

Moret said estimates are that payroll tax incentives on the Sasol project will cost the state $70 million over 10 years, possibly more if more hiring is done. However, he added, more hiring means more state tax revenue. Other incentives include a $20 million worker training facility and a $115 million payment to the company for land and infrastructure.

Moret said the project is expected to generate $873 million in state taxes over 20 years, while creating more than 1,200 direct jobs thousands of construction jobs. Companies don't get the tax credit incentives unless they meet hiring benchmarks, he also said.

House Speaker Chuck Kleckley and Sen. Ronnie Johns, both Lake Charles Republicans, stressed the economic benefits to their area and the fact that Sasol already has spent millions toward the project. Adley and others said they did not think a two-week delay would harm the project.

Administration officials stressed Friday that an LSU report outlining costs and benefits was available months ago and was provided to the Legislative Fiscal Office. However, fiscal office staffers said Friday that they only just got the latest available report from administration economic development officials.

 

In the end, no lawmakers voted against Adley's motion for a delay, although Senate President John Alario said he hoped a vote could be expedited. He suggested that a meeting of the panel could be arranged ahead of the one planned in two weeks.

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