Governmental Accounting Standards Board (GASB) – Statement No. 77
GASB Statement No. 77 – “Tax Abatement Disclosures” – requires governments to disclose in the notes of their financial statements certain information related to tax abatement agreements. Tax abatements are used by state and local governments to encourage economic development. They are defined as an agreement between a government and another entity in which the government agrees to forgo tax revenues, and the entity agrees to subsequently take a specific action that contributes to the economic development or otherwise benefits the government or its citizens.
GASB 77 requires disclosure of the tax abatement information that reduces the reporting government’s tax revenues. The tax abatements in St. Charles Parish fall under three categories:
- State Industrial Abatements
- Parish Council Abatements or
- Parish Industrial Development Board Abatements
State Industrial Abatement
Louisiana Industrial Abatements affect the manufacturing industry in St. Charles Parish. They are a constitutional exemption granted by the Louisiana Board of Commerce & Industry. The Louisiana Industrial Tax Exemption Program (ITEP) exempts up to 10 years of Ad Valorem Taxes on a manufacturer’s new investment and annual capitalized additions related to the manufacturing site.
Gov. John Bel Edwards issued Executive Order No. JBE 2016-26 on June 24, 2016, which was amended and restated by Executive Order No. JBE 2016-73 issued on Oct. 21, 2016, requires the approval of the School Board, Parish Council, and Sheriff for the applicant to receive an 80 percent property tax abatement for an initial term of five years and the option to renew for five additional years at 80 percent property tax abatement on a manufacturer’s qualifying capital investment related to the manufacturing process.
Parish Council Abatements
Parish Council Abatements are granted by the St. Charles Parish Council to act as incentives for economic development projects within the parish. They are designated to attract investment, development, and employment and allow tax exemption for real estate development.
The project called “Payment in Lieu of Taxes” (PILOT) is designed “to assist development and the community with additional jobs, sales tax revenue, and other benefits to equal or exceed the reduction in property tax payments.”
Parish Industrial Development Board Abatements
The Industrial Development Board of the Parish of St. Charles, Louisiana Inc. is a nonprofit corporation that was organized to encourage and assist in the development of new businesses or industries and to rehabilitate and assist existing businesses and industries. The seven-member board, under the authority of the St. Charles Parish Council, has the authority to issue industrial revenue bonds and assist in bringing economic growth to the parish, in addition to approving “Payment in Lieu of Taxes” (PILOT) projects.