PAR Council explains proposed constitutional amendments on Saturday’s ballot

Editor’s Note: The following explanations of the four proposed amendments to the Louisiana Constitution are presented by the Public Affairs Research Council of Louisiana (PAR). PAR is an independent, non-partisan organization. PAR also explains what a vote for or against each proposition would mean to Louisiana residents:

Amendment 1: Offshore Goods Property Tax Exemption
Current Situation: Businesses and homeowners pay property tax to local governments based on the assessed value of their property on an annual basis. Property might include land, homes, buildings, machinery or business inventory. The state Constitution allows certain exceptions, such as the homestead exemption for homeowners and the Industrial Tax Exemption Program for manufacturers. The only property tax exemptions are those listed by the state Constitution. However, the U.S. Constitution trumps state law.

Proposed Change: This amendment would prohibit property taxes on raw materials, goods, commodities and articles stored for maintenance if destined for the Outer Continental Shelf. While part of the United States, the OCS is not subject to the jurisdiction of individual states. If the amendment does not pass, the tax
on such property would continue to be levied. Lawsuits could follow to determine if the tax passes muster with the U.S. Constitution. The number of parishes immediately affected by this amendment would be relatively small and mostly confined to areas near the Gulf of Mexico.

Argument For: This amendment offers necessary clarification so as not to cause undue burden or confusion for tax assessors or oil and gas companies or cause a shift in storage or repair of materials to other states. Passage would also help avoid lengthy and expensive battles in state and federal court that would create uncertainty for business for many years.

Argument Against: A vote against this amendment would allow those few parishes that tax this class of property to continue to collect this much-needed revenue.

Some equipment from inactive oil rigs is already exempt under another section of the Louisiana Constitution, and we do not need more tax breaks.

Amendment 2: Adds Schools to the Education Excellence Fund

Current Situation: The Education Excellence Fund is a component of the Millennium Trust created in 1999 with a specific purpose to support excellence in educational practice. The Louisiana Department of Education is responsible for providing the appropriations and oversight of the Fund. Money in the Fund can be distributed only to elementary and secondary schools and special schools that include educational programs for instructional enhancement including early childhood programs for at-risk children, remedial instruction, and assistance to children who fail to achieve the required scores on tests for advancement to a succeeding grade, or other approved programs.

Proposed Change: The amendment would add appropriations to one legislatively approved special school, Thrive Academy, and two laboratory schools operated by colleges — the Louisiana State University Laboratory School and the Southern University Laboratory school. Each school would receive $75,000 plus the average per pupil amount the Fund pays to other public schools. The Louisiana Educational Television Authority (LETA), which is not a school but is a state agency providing statewide educational programming through Louisiana Public Broadcasting, would receive $75,000 annually as part of the proposed changes. The amendment also performs housekeeping by removing an outdated provision of the Constitution that is no longer in force.

Argument For: The Education Excellence Fund serves an important purpose and benefits the children at the schools it sponsors. The amendment adds three great schools that should have been a part of the original language. The Louisiana Educational Television Authority, through LPB, provides programs of unmatched quality and access to many children across the state, particularly underserved children under six years of age. LETA already is included in the state’s special schools budget category under the Louisiana Department of Education.

Argument Against: The amendment is a good example of using the Constitution for minutia instead of for fundamental law. We are basically calling upon voters to perform the Legislature’s role of making appropriations by constitutionally allocating a few hundred thousand dollars of state money in a new direction. The better way would be to propose a different constitutional amendment that would let the Legislature or the state board of education allocate the funds in a manner most likely to support excellence in education.

Amendment 3: Board of Tax Appeals Jurisdiction

Current Situation: Individuals and businesses unhappy with a decision they believe is in error by the state Department
of Revenue or local taxing authorities can appeal to the state Board of Tax Appeals. The Board does not have the authority to declare tax laws, ordinances or tax collector actions as unconstitutional.

Taxpayers must have their Board case transferred to a district court if they believe a tax law, rule or action of a taxing authority is unconstitutional.

Proposed Change: The proposed amendment would enhance the scope and power of the Board of Tax Appeals and allow the body to rule on whether taxation and fee matters are constitutional under Louisiana or U.S. law. This level of authority is not generally allowed for executive branch agencies.

However, the American Bar Association recommends that executive branch tax tribunals should possess at least some limited authority to consider constitutional issues on specific grievances that come before those bodies.

Many state tribunals may do so. This amendment would let taxpayers have their entire tax dispute heard in one forum and could expedite resolution.

The Board decisions could be appealed to state courts. Taxpayers still would have the option to take their case to the courts instead of the Board of Appeals. The Legislature would be able to pass laws affecting the Board’s jurisdiction and other related matters with a 2/3 vote.

Argument For: Following a modernization of the Louisiana tax appeals process in 2014, this change would be another important step toward improving the system to make it fairer and more efficient.

It places Louisiana in the mainstream of states that have reformed their tax dispute process. The amendment would reduce delays and costs in deciding tax disputes which is why both business and local government support this change.

Argument Against: Historically, courts have been the only bodies that can decide whether an action or rule complies with the Louisiana or U.S. Constitution.

This amendment and its companion act would change that precedent. Unlike judges in the court system, none of the members of the Board of Tax Appeals is elected and they might have less expertise in Louisiana or U.S. constitutional law. Board members might be influenced by the governors who appoint them or the Senators who confirm them. There is no evidence that the current system fails to resolve issues correctly.

Amendment 4: New Orleans Tax Exemption for Affordable Housing

Current Situation: Property tax exemptions are listed in the state Constitution. Additional exemptions cannot be added by state law or local ordinance.

Property taxes are a major source of revenue for local governments. Usually local governments have no control over what is exempted from property tax, because those rules are in the Constitution and new exemptions are initiated by the state Legislature. A shortage of affordable housing is a problem in many urban areas, particularly New Orleans.

Proposed Change: The amendment would grant the City of New Orleans the ability to establish property tax exemptions for residential properties that provide affordable housing.

Developments over 15 units and short-term rental properties would be ineligible.

The tax assessments could be fully or partially exempted. Properties could be upgraded without being taxed for the added value. Depending on how the city structures the program, the target could be owner-occupied homes, with the exemption applying directly to the homeowner, or rental homes or apartments with the tax break going to the landlord or developer in exchange for affordable rents. New Orleans would create the rules and process for the program, which could vary greatly depending on how it is constructed.

The precise definition of “affordable” housing would be left to the city to decide.

Argument For: Giving local government another tool to handle local issues such as affordable housing only makes sense. There is a genuine need for more affordable housing in New Orleans. The proposal is an attempt to help longtime residents remain in the city, to attract new residents and also to reduce blight. Because property taxes finance local government, the decision on what to exempt should be made at the local level. This amendment avoids the problem of past attempted changes to the Constitution that would have added narrowly defined programs.

Argument Against: This amendment could diminish a critical and evolving revenue base for New Orleans at a time when a disproportionate amount of city property is exempted already. Low-priced owner-occupied homes already benefit from the $75,000 homestead exemption. Several state and federal programs exist to address urban housing problems.

The pressure to raise taxes would increase with this program. All in all, this amendment could turn into a costly proposition with high risk for abuse and favoritism.

Creating this new authority only for New Orleans would require further need for constitutional amendments should other parishes or municipalities wish to have the same authority.