New Report: Tax Handouts to Wealthy LNG Developers Deprive Louisiana Communities and Schools of Needed Funds

LOUISIANA - A new report out today details how the export industry for liquefied methane gas receives billions of dollars in tax breaks in Louisiana, depriving local communities of much-needed funds including for schools, healthcare, and infrastructure. As Donald Trump praises LNG export projects and vows to undo safeguards that protect people from the worst pollution, this report brings much-needed scrutiny to the practice of giving wealthy LNG corporations millions of dollars per job, which sacrifices tax revenue for infrastructure and services and ultimately damages the working class the industry claims to help.

Using data and in-depth interviews with community members, the report, titled The People Always Pay: Tax Breaks Force Gulf Communities to Subsidize the LNG Industry, tells the story of how tax abatements result in economic and social harm in Gulf Coast states including Louisiana. This report was recently submitted to the Department of Energy to inform its pending updated criteria used to determine if an LNG project is in the public interest.  

As detailed in the report, LNG corporations create so few permanent jobs in exchange for these tax breaks that every single job costs the local community millions of dollars in subsidies to already-wealthy developers. On top of that, each Louisiana facility releases significant pollution responsible for numerous health conditions, poses explosion risks, uses precious water resources, disrupts local fishing and tourism industries, and threatens wildlife and ecosystems – all of which degrade the quality of life and raise the cost of healthcare, utilities, and county services for the same communities. 

Although Governor Landry has proposed a package of bills to reform Louisiana’s tax system that would undo many of the state’s tax breaks in exchange for lower income tax rates, he’s decided to keep the Industrial Tax Exemption Program in place – which allows companies to avoid paying local property taxes on manufacturing facilities for up to ten years. The nine Louisiana-sited LNG export terminals in this study’s scope would avoid paying $21.1 billion in property taxes under ITEP if they all come to fruition, equal to an effective subsidy of $6.7 million per job promised under the program.

LOCAL IMPACTS

The report looks at two primary tax abatement programs in Louisiana that have been granted to LNG export projects. Due to Gov. Landry’s February 2024 executive order, local entities have little say over approvals of specific tax abatement measures like the ITEP. The Republican-led Louisiana Legislature creates and approves the programs that open the door for corporate handouts.

• Industrial Tax Exemption Program (ITEP): All the facilities in this report’s scope benefit from ITEP, a program that exempts industrial companies from up to 80% of local property taxes on manufacturing facilities for up to ten years, with “mega projects” receiving up to 93% exemptions. In 2023, an estimated $148.6 billion worth of property was exempt statewide under ITEP, according to Together Louisiana, representing a significant loss in potential revenue for local governments and communities. A February 2024 executive order by Gov. Landry reversed 2016 reforms requiring job creation and local government approval for exemptions. This rollback returns ITEP to its pre-2016 form, generously subsidizing projects with few common-sense requirements, while companies lost over 26,500 jobs from 1998 to 2017 despite promising 121,000 new positions. 

• Quality Jobs (QJ) Program: Eligible companies can receive cash rebates for creating jobs and promoting economic development, including up to 6% rebate on payroll expenses for ten years and additional incentives on capital expenditures. In 2018, the program provided $100 million in corporate subsidies. The state auditor found that most of the income generated would have occurred without the program, meaning the same benefits could have been achieved without the tax awards, resulting in a net loss for the state treasury. 

The most impacted Louisiana communities include:

• Calcasieu and Cameron Parishes: Every proposed or operating onshore LNG export terminal in Calcasieu and Cameron Parishes has secured property tax exemptions under ITEP to abate at least 80% of their property tax bills. These exemptions cost the region millions in lost revenue, which could have funded community infrastructure and services. Local communities have seen little benefit from the projects, with LNG terminals often employing fewer than 400 people, many of whom are non-local. Meanwhile, the area struggles with neglected infrastructure, including the Calcasieu River Bridge, which is rated just 6.6 out of 100 for safety. 

• Plaquemines Parish: The Plaquemines LNG facility’s ITEP agreement will result in a $834 million loss in revenue from 2025 to 2034 – an average of $83 million annually. This is more than double the total tax revenue of $62 million the parish generated in 2023. The lost revenue means losing $316 million for schools, $226 million for law enforcement, and $83 million for health services over the next decade. The facility has also contributed to the destruction of 350 acres of wetlands, critical for flood protection and water filtration. An investigation by The Guardian found that Venture Global, the company developing Plaquemines LNG, used up to a quarter of the water in the parish in some months between May and October 2023. 

STATEMENTS

 "The immense scale of tax breaks granted to billion-dollar LNG projects—millions of dollars per job—is mind-blowing. These deals essentially pay industry to inflict more suffering on already climate-ravaged communities by polluting the air and water while depriving Gulf Coast communities of vital revenue for schools, infrastructure, healthcare, emergency services, coastal restoration and protection,” said James Hiatt, Founder of For A Better Bayou. “These tax exemptions are a burden to our communities, and bring absolutely no economic prosperity. It's time to stop these giveaways, make polluters pay, and ensure that economic benefits serve the people, not just Big Gas corporations."

“For communities situated near LNG export projects, there are few facets of life that are not negatively impacted by these facilities. Yet, local and state officials forgo vast sums of public money in tax giveaways, sacrificing everything from public health to local fishing and tourism industries, in exchange for inadequate promises of jobs or investment,” said Alison Kirsch, Sierra Club senior analyst and report author. “This lopsided deal with the industry means that communities are left cleaning up the mess, literally and figuratively, without proper resources.”

The People Always Pay is being released by Sierra Club with Better Brazoria, For a Better Bayou, Healthy Gulf, Ingleside on the Bay Coastal Watch Association, Port Arthur Community Action Network, Sierra Club Delta Chapter, Sierra Club Lone Star Chapter, South Texas Environmental Justice Network, and The Vessel Project of Louisiana.

Read the full report at sc.org/LNGtax.