A plan to phase out a local tax on business inventory — a critical revenue source for certain parishes — is still alive after a Senate committee on Tuesday gave its approval, but with some key changes.

Parish governments currently have a constitutionally protected right to levy an inventory tax on tangible business assets, which include things ranging from chemicals and natural gas to cars and groceries.

In some parishes, the business inventory tax generates more than $30 million a year. But in others, the tax brings in a meager $1 million or less.

Landry’s Revenue Secretary, Richard Nelson, the tax plan’s principal architect, has said the inventory tax drives away potential business investment in Louisiana. But he also acknowledges eliminating it presents a difficult political problem given local government reliance on it.

The Senate Revenue and Fiscal Affairs committee on Tuesday advanced a plan to incentivize parishes to voluntarily stop collecting the tax. In exchange for a lump-sum payment from the state equal to three years’ worth of parish collections, parishes would agree to forever relinquish their right to levy the tax.

Another factor in play is that while the parishes charge businesses the inventory tax, the state runs a credit program that reimburses those businesses for the amount they pay the local governments. In recent years, that credit program has cost the state more than $280 million annually.

Parishes would have until July 2026 to decide whether to take the buyout. The committee also extended the corresponding inventory tax credit program for corporations through July 2026.

Under a previous version of the plan, the credit would have ended in January.

“It just creates a longer runway for businesses to be able to make choices, for parishes to be able to make choices, and for us as the Legislature to be able to see the impact,” said Sen. Mike Reese, R-Leesville, a member of the Senate tax committee.

The plan would also allow parishes that choose to keep taxing business inventory to do so at a lower rate of their choosing. Right now parishes are required to assess inventory at 15% of its value.

That idea is geared toward moving parishes away from reliance on the revenue stream: It would allow them to lower their collections from the tax while also staying somewhat competitive with neighbors that totally opt out of collections.

“It’s a careful balance that we don’t place parishes in a bad position here and that we don’t put businesses in a worse position if they have to be in a parish that does not opt out and they don’t receive the credit back from the state,” said Reese.

Reese called the tax “convoluted,” noting it’s assessed and paid at the local level but then refunded back to businesses by the state.

“It’s the desire of this administration and this Legislature to hopefully put us in more competitive position nationally,” he said.

Keeping local governments whole

On Tuesday, another piece of a plan to keep local governments whole amid business inventory tax changes emerged: the Local Revenue Fund.

The fund, which would be set out in the Constitution, would be used to pay parishes that opt out of collecting the business inventory tax.

It would be set up in the state treasury and administered by the Uniform Local Sales Tax Board.

Lawmakers would have to decide where the funds come from.

Said Reese: “That’s the question mark: where the revenue comes from.”

It’s an open question amid ongoing negotiations over income tax rate cuts and new sales tax measures.

Rep. Daryl Deshotel, R-Marksville, said Monday that the Local Revenue Fund would work only if the revenue for it comes from an expanded sales tax on services.

But the plan to tax more consumer services is stagnating in the House and doesn’t currently have the support it needs to pass.

Deshotel said he’s “vehemently against” increasing Louisiana’s sales tax rate as part of the overall tax package.

“We’re already tied for the highest sales tax in the country, and if we would increase this, we would be the highest,” he said. “To double down on a tax that I know is bad for the people, I just can’t support that.”

Prescription Drugs

Another part of the plan approved by the Senate committee Tuesday allows locals governments to continue collecting tax on prescription drugs, which the state does not do.

As it tries to streamline the state tax code, the Landry administration has been pushing to get rid of the local tax on pharmaceuticals.

Committee chair Sen. Franklin Foil, R-Baton Rouge, said Tuesday he would prefer to see an end to the local tax on prescription drugs and would continue to work toward that goal.

Asked after the hearing about the decision to maintain the prescription drug tax, Foil said it was a necessary part of the negotiations.

“In trying to get rid of the inventory tax and doing some things that we’re trying to do to make all of this work, it gave more revenue to locals,” he said.

Facebook parent Meta is planning an artificial intelligence data center in north Louisiana, a multi-billion-dollar project that would bring as many as 500 permanent jobs and serve as an endorsement of Louisiana as a home of major technology infrastructure if it is able to win regulatory approval.

An application to state regulators for a new power plant to support the project says that an unnamed company wants to build “a large and economically transformative facility” in Richland Parish.

In recent days, economic development officials and regulators have said publicly that the project is a data center, and is expected to involve an investment in the billions of dollars. Two sources familiar with the project who weren’t authorized to speak publicly say the company is Meta.

Data centers — airport-sized buildings filled with computer servers and other IT infrastructure — are a critical part of the AI boom that is rapidly transforming the global tech industry.

Companies like Meta, Amazon and Microsoft are spending hundreds of billions of dollars to construct these processing hubs across the U.S. and overseas. Nothing of the scale of the Meta project has been proposed before in Louisiana, and state economic development officials, armed with a new tax credit to lure these projects, see them as way to attract high-paying jobs.

The project would also represent an economic development coup for Gov. Jeff Landry, a conservative Republican who is working to lower corporate tax rates and take on other business-friendly initiatives.

Landry’s office declined to comment. Meta did not respond to a request for comment on its role in the project.

“We’re a job jobs jobs administration, so we’re happy to see big projects,” said Stephen Swiber, the resilience officer for the Landry administration in an interview Tuesday, without referencing the Meta project specifically.

The $5 billion project is expected to employ 300 to 500 people with an average salary of $82,000, according to filings to the Public Service Commission from Entergy. The PSC is being asked to approve three new natural gas power plants and other generation updates from Entergy, at a cost of at least $3.2 billion, that would be used to power the facility.

During a panel discussion Thursday at the Tulane Energy Forum, PSC Commissioner Eric Skrmetta said the data center could be up and running with accompanying power plants within three years. In addition, he said that there are three other AI data centers in various phases of planning in Central Louisiana.

Technology companies are increasingly drawn to Louisiana because of the state’s low electricity rates and amenable regulatory process, Skrmetta said.

“We are moving them through the process quickly,” said Skrmetta. “They’re finding a lot of impediments in other states that are keeping them from moving forward.”

The PSC will hear Entergy’s proposal on Wednesday and decide whether to hire a private consultant and a law firm to review the utility’s application. Entergy is requesting the commission to evaluate the proposal in ten months, and the project is expected to face opposition.

A handful of groups have requested to intervene in Entergy’s power plant proposal, including the Sierra Club and the Southern Renewable Energy Association.

They’re raising concerns over the data center’s reliance on fossil fuels, high water demand and how ratepayers could be affected by Entergy’s proposal. The organizations are also worried about rushing the regulatory process for such a high-stakes project.

“They’re asking a whole lot and not giving time for people to take a position,” Logan Burke, executive director of the Alliance for Affordable Energy, said.

‘A game changer’

The data center, if it wins approval, could be transformational for Richland Parish, home to about 20,000 residents in a corner of the state that has struggled with high rates of poverty.

Meta is expected to set up shop on over 2,250 acres of agricultural land off Hwy 183, according to a public notice. Two of the proposed power plants would be located near the facility at a site called Franklin Farms in the community of Holly Ridge, the Entergy filings says.

“It’s a game changer for northeast Louisiana,” said PSC Commissioner Foster Campbell, whose district includes the proposed facility.

‘Tremendous opportunity’

Meta now operates more than two dozen data centers around the U.S. — massive facilities that can bring thousands of construction jobs and hundreds of permanent jobs.

Earlier this month, one of its newest data centers was completed outside of Nashville in Gallatin, Tennessee. The 800-acre campus has two buildings totaling more than 1.5 million square feet, with plans for a third underway. The $1.5 billion facility employed 1,100 constructions workers while it was being built and now has 100 full-time employees.

Those permanent jobs are technical and require skilled workers, typically with an associate’s degree, but do not require a four-year or professional degree, which makes Louisiana’s workforce well suited to the potential demand the centers will create.

Louisiana Economic Development has been a strong proponent of data centers. The agency supported legislation that went into effect this summer offering tax rebates on data center software and equipment, at a time when technology companies and private equity firms have ramped up investment in these facilities. 

In an interview last month, LED Secretary Susan Bourgeois said that her administration is working to bring data centers to north Louisiana.

“We have tremendous opportunity in that space. We have land and grid capacity,” Bourgeois said. “We have a workforce that is primed to deliver this kind of labor.”

The Louisiana Community and Technical College System was already working with the state to develop a curriculum to help train students for a career in the emerging field, Bourgeois said.

Shreveport-Bossier City Advocate reporter Liz Swaine contributed to this report.