BATON ROUGE, La. — It was a squabble over $2.9 million in property-tax breaks — small change for Exxon Mobil, a company that measures its earnings by the billions.
But when the East Baton Rouge Parish school board rejected the energy giant’s rather routine request last month, the “no” vote went off like a bomb in a state where obeisance to the oil, gas and chemical industries is the norm.
The local chamber of commerce took out a full-page newspaper ad, warning of a rise of “radicalism.” The head of the Louisiana Association of Business and Industry wrote that “the anti-business crowd has had their fun,” but needed to “cool their jets.”
And now, somewhat surprisingly, business-friendly Louisiana finds that it is the latest flash point in a roiling, community-by-community debate that pits liberals and local activists against defenders of the lavish tax incentives offered to woo big business.
It has been a David vs. Goliath story in the Louisiana capital, where a grass-roots coalition of black and white churches, activists and ordinary citizens have successfully clamored to democratize a system that used to dole out billions in property-tax breaks without giving the local school boards, city councils and other government entities that depend on those taxes any say in the matter.
The vote has also revived a vexing, and defining, Louisiana question about the deference a perennially impoverished state must show to big business.
“We’ve allowed the oil and gas industry to hijack our democracy,” said Russel L. Honoré, a retired Army lieutenant general who earned acclaim for leading the military response to Hurricane Katrina, and who had urged the East Baton Rouge Parish school board to reject the exemptions. “The industry will brag about it all the time, how well we’re doing in terms of business development. Well, if we’re doing so well, why are we the second-poorest state?”
Complaints that state and local governments have given away the farm to big business have flared recently in other states as well, most sharply in New York City, where liberal politicians and union supporters have blasted the incentives of up to $3 billion that helped woo Amazon’s new corporate offices in Queens. In Virginia, a socialist state House member, Lee Carter, has called a $70 million grant package for the chip maker Micron “corrupt.”
But the tone is markedly different in Baton Rouge. Though the city is home to the state’s flagship university, it is more Bakersfield than Berkeley, defined strongly by the business and culture of the oil patch. Exxon Mobil’s vast old refinery on the North Side has employed generations of local workers. It is the area’s largest manufacturer and largest taxpayer.
Dawn Chanet Collins was among the school board members who voted against the tax break in a 5-4 vote in mid-January. Though she praised the oil giant for the donations and volunteer hours it showers on local schools, she said that giving the company exemptions for the already completed expansions of the refinery and a polymer plant simply did not make sense.
The school district is in a budget crisis, and it is looking for ways to cut roughly $30 million in future spending. Layoffs may be on the table. Teachers say that administrators have even been rationing paper.
“It would have been completely irresponsible for the board to say, ‘Go ahead, keep your money,’ when we have to fill a $30 million gap on our end,” Ms. Collins said.
For decades, industrial property-tax breaks in Louisiana were in the sole control of a little-noticed state board that approved them with no local input — a system unique in the nation, according to Greg LeRoy, executive director of Good Jobs First, a nonprofit group that tracks such incentives.
Gov. John Bel Edwards, a moderate Democrat, overhauled the process in 2016 with an executive order that for the first time in 80 years gave local governments the right to decide whether their revenue would be sacrificed to aid industry.
In the months before Mr. Edwards’s order, the state’s Industrial Tax Exemption Program, or ITEP, had been thrust into the public debate by the efforts of the grass-roots coalition, known as Together Baton Rouge. Before then, it had gone largely unnoticed by everyone except those who benefited from it.
The appointed panel that ran the program, the Board of Commerce and Industry, handed out nearly $10 billion in local tax exemptions between 2008 and 2016, but its actions were rarely covered in the press. Many Louisianans had no idea what the board did.
“Nobody knew about it,” Ms. Collins said. “It had gone on for so long that people had forgotten.”
Together Baton Rouge and its sister organization, Together Louisiana, argue that the industrial tax breaks starve local schools and governments of badly needed funds and leave them unable to lift a state mired toward the bottom of national rankings on education, crime and infrastructure. In Baton Rouge, one in four residents lives in poverty.
Their message has found an audience: Together Louisiana’s YouTube video about the exemptions, posted in November and titled “Why Louisiana Stays Poor,” has been viewed more than 600,000 times.
A few days before the Baton Rouge school board vote, the groups held a meeting at St. Mary Baptist Church to organize opposition to the Exxon Mobil application. Scores of people crammed into a Bible study classroom decorated with maps and photos of the Holy Land.
Edgar Cage, who organized the meeting, was careful to say that no one was accusing Exxon Mobil of any wrongdoing. “All we’re saying is, we want a change,” he said. “We want a balance.”
Business leaders reacted strongly to the Baton Rouge vote because they are worried about much more than just how a few capital improvements are taxed. As much as $90 billion in oil and gas industry investments could come the state’s way in the next decade, driven in large part by the boom in domestic shale gas drilling, according to David Dismukes, executive director of the Center for Energy Studies at Louisiana State University.
By itself, Dr. Dismukes said, the school board’s vote “was not a big deal — but the precedent it sets is going to be really big for these projects on the drawing board that are $100 million or $200 million.”
Critics of the 2016 overhaul that gave local officials a say over tax breaks argue that it deprives the state of a big competitive edge it used to enjoy: one-stop shopping. Instead of dealing only with a central state board, businesses must now make their case for tax breaks to a host of parish councils and school boards and sheriffs, and win them over individually.
Last week, State Senator Mack A. White Jr., a Republican from the Baton Rouge area who used to work for Exxon Mobil, said he planned introduce a bill to reverse the overhaul and take approval power away from local officials again.
There have also been stabs at damage control and soul-searching. Mayor Sharon Weston Broome of Baton Rouge spoke on Jan. 28 at what the local newspaper described as a “pep rally” for Exxon Mobil.
On Sunday, Tim Morris, a columnist for The Times-Picayune in New Orleans, compared the state’s tax-break system to the $241 million contract extension the New Orleans Pelicans of the N.B.A. offered to their star player Anthony Davis — an offer he turned down, asking to be traded instead.
“Why do we have to offer exorbitant bribes to get people (and businesses) to stay here?” Mr. Morris wrote.
But for others — including some local government officials freshly armed with the new veto power — the tax breaks are a pragmatic choice in an increasingly competitive world.
In November, local authorities in Calcasieu Parish unanimously approved a tax break worth $2 billion over 10 years for a $15 billion liquefied natural gas facility. Eric Tarver, a car dealer who sits on the parish school board, said he feared “playing chicken” with a big company that was promising to create hundreds of jobs.
“Should we have negotiated with them? Maybe,” Mr. Tarver said. “But the benefits of them coming far outweigh the risk of haggling with them and having them go to Corpus Christi or Houston, or even Lafayette.”