Last month, the Louisiana Board of Commerce and Industry deferred action on more than two dozen requests for the Industrial Tax Exemption Program, which would equal about $15 million in property tax breaks. The decision came after Gov. John Bel Edwards said he wants to change Louisiana’s approach to the tax exemption program created decades ago, and issued an executive order in June spelling out that he intends to tie the tax breaks to job creation and retention and to involve local government agencies in the decisions. Edwards recently announced he is further tightening the rules for the tax exemption program.
The Louisiana Board of Commerce and Industry deferred action on more than two dozen requests for the Industrial Tax Exemption Program on Monday, which would equal about $15 million in property tax breaks. New and expanding manufacturing facilities are allowed an exemption from local property taxes for up to 10 years, but must be signed off by The Board of Commerce and Industry and the governor. However, Gov. John Bel Edwards said he wants to change Louisiana’s approach to the tax exemption program created decades ago, and issued an executive order in June spelling out that he intends to tie the tax breaks to job creation and retention and to involve local government agencies in the decisions.
After more than a year of weak oil prices, the fallout of roomnight demand in oil-producing areas has waned as supply growth continues its strong upward momentum, which means more trouble ahead for hoteliers. According to Hotel News Now, the decline in demand can easily be traced back to the price of oil. As oil prices hovered around $100 per barrel, new oil and gas wells needed additional workers and offered employment for many. But the lack of accommodations in the rather undeveloped areas of the U.S. forced workers to, in the beginning, sleep in their cars and then in “man camps” until finally hotel development caught up with the rapid demand. But as much as room demand increased when oil prices were high, it waned quickly when oil prices, and thus production and employment, decreased rapidly in 2015. Room demand changes in the submarkets* that are primarily driven by the oil and gas industry have been negative since March 2015 and decreased more than 10% successively in the last three months ending January 2016. The negative impact of the last few years is only the latest roller coaster change in revenue per available room as the oil prices and supply additions caused hoteliers euphoria in the mid-2000s and heartburn in the more recent past.
Once again, New Jersey and Illinois ranked as the two worst states in the country when it comes to property taxes, according to a new survey from personal finance website WalletHub. In order to identify the states with the highest and lowest property taxes, WalletHub’s analysts compared the 50 states and the District of Columbia using U.S. Census Bureau data to determine real-estate property tax rates. While property taxes vary from county to county across the state, WalletHub divided the “median real-estate tax payment” by the “median home price” in each state to determine the property tax rate.
The U.S. hotel industry ended 2014 with a bang, reporting positive results in the three key performance metrics during December 2014, according to data from STR, Inc. Overall, in year-over-year results, the U.S. hotel industry’s occupancy was up 4.8 percent to 52.6 percent; its average daily rate rose 4.3 percent to $113.42; and its revenue per available room increased 9.3 percent to $59.62. Demand for the month was 5.8 percent higher than last year, and Interstate and Suburban hotels even reported demand increases of more than 6 percent.
For the second year in a row, Georgia took the top spot in Site Selection magazine's Top US Business Climates: 2014. The magazine releases its annual rankings each November. The Peach State had been a strong performer in this contest for several years, rising in the ranking steadily thanks to its Quick Start workforce training program, logistics infrastructure and economic development leadership, among other factors, according to Site Selection. The magazine's ranking methodology is as follows: 50 percent of the overall Business Climate Ranking is based on a survey of corporate site selectors who are asked to rank the states based on their recent experience of locating businesses in them. The other 50 percent is based on an index of seven criteria: performance in Site Selection's annual Competitiveness ranking; total New Plant Database-compliant facilities in 2013; total new facilities in 2013 per capita; total 2014 new projects year to date; total 2014 projects year to date per capita; state tax burdens on mature firms and new firms according to the Tax Foundation and KPMG Location Matters analysis.
Many assessors throughout Louisiana believe current property tax exemptions granted to the oil and gas industry are unequal and not uniform, and are now seeking changes so that the industry pays its "fair share." According to the Daily World, at a recent hearing, assessors proposed that the commission lift its current exemption on taxing horizontal drilling, change the way the apparatus used in drilling wells is taxed and set up a new tax structure for injection wells, wells used to extract brine and those at natural gas storage facilities. Assessors are also questioning the way all well and drilling equipment are taxed, because Louisiana's current depreciation schedules fall well below the current ‘replacement cost new’ value that’s used in other states. The Louisiana Oil and Gas Association and Louisiana MidContinent Oil and Gas Association oppose the proposals, but are withholding their real opposition for an Aug. 6 meeting at which formal arguments will be heard.
Baton Rouge, Louisiana lawmakers are encouraging the Louisiana Tax Commission to improve their oversight of property taxes, after an audit determined their review by parish tax assessors was inadequate. According to SeattlePI.com, Charles Abels, administrator for the commission, said the office was doing its best with their $3.8 million budget and available manpower to ensure assessors were accurately setting property taxes. But he wouldn't say that any changes were in the works since the July audit was released.
Despite the dragging economy, the US hotel industry continues to experience strong demand as over 500 million room nights were sold in the first half of 2012, a new record. According to USA Today Travel, as hotels continue to fill more rooms, pricing power is firmly in the hands of the general managers and revenue managers, so room rates increased as well. Still though, of the top 25 markets, only New Orleans and San Francisco have reached and surpassed their pre-recession room-rate-peaks.
Bills that will allow local governments in Louisiana to recruit companies with the promise of exemption from property taxes have passed the Senate easily. According to NOLA.com, the bills call for a statewide constitutional referendum in November that would authorize the tax breaks and set in place the rules of the program. The bills will move back to the House where they will have to agree upon changes made by the Senate.