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Regular Session, 2010
SENATE BILL NO. 432
BY SENATOR MARIONNEAUX
TAX/TAXATION. Constitutional amendment to repeal severance taxes upon oil and gas
and to allow the levy of a tax upon hydrocarbon processing and to require a dedication of
the first use of such taxes to replace constitutional dedications of severance tax and to
require the distribution of the remainder for state highways or bridges, the Coastal Protection
and Restoration Fund, and to or for the use of schools, colleges and universities, and other
post secondary education institutions. (2/3-CA13sl(A))
A JOINT RESOLUTION1
Proposing to Article VII, Section 4(B) and to repeal Article IX, Section 9 of the Constitution2
of Louisiana, relative to taxes related to natural resources and the use of such taxes;3
to repeal certain severance taxes; to allow certain natural resources to be subject to4
the levy of a tax upon hydrocarbon processing in the state imposed under the5
legislature's general authority to tax under the Constitution of Louisiana; to require6
certain dedications if such tax is levied; to provide for distribution of the revenues7
from such tax; and to specify an election for submission of the proposition to electors8
and provide a ballot proposition.9
Section 1. Be it resolved by the Legislature of Louisiana, two-thirds of the members10
elected to each house concurring, that there shall be submitted to the electors of the state, for11
their approval or rejection in the manner provided by law, a proposal to amend Article VII,12
Section 4(B) and to repeal Article IX, Section 9 of the Constitution of Louisiana, to read as13
follows:14
ยง4. Income Tax; Severance Tax; Political Subdivisions15
* * *16
(B)(1) Severance Tax. Except as provided for in Subparagraph (2) of this17 SB NO. 432
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Section, taxes may be levied on natural resources severed from the soil or water, to1
be paid proportionately by the owners thereof at the time of severance. Natural2
resources may be classified for the purpose of taxation. Such taxes may be3
predicated upon either the quantity or value of the products at the time and place of4
severance.5
(2) Effective July 1, 2011, the following taxes shall be repealed and no6
further taxes shall be levied on the severance of such natural resources:7
(a) The severance tax on oil.8
(b) The severance tax on distillate, condensate, or similar natural9
resources mixed with oil or gas.10
(c) On natural gas and based on equivalent gas volumes, natural11
gasolines, casinghead gasoline, and other natural gas liquids, including but not12
limited to ethane, methane, butane, or propane.13
(3)(a) Except for a hydrocarbon processing tax, no further or additional14
tax or license shall be levied or imposed upon oil, gas, or sulphur leases or rights.15
No additional value shall be added to the assessment of land by reason of the16
presence of oil, gas, or sulphur therein or their production therefrom. However,17
sulphur in place shall be assessed for ad valorem taxation to the person, firm, or18
corporation having the right to mine or produce the same in the parish where located,19
at no more than twice the total assessed value of the physical property subject to20
taxation, excluding the assessed value of sulphur above ground, as is used in sulphur21
operations in such parish. Likewise, the severance tax shall be the only tax on22
timber; however, standing timber shall be liable equally with the land on which it23
stands for ad valorem taxes levied on the land.24
(b)(i) "Hydrocarbon processing tax" means a tax upon the use of25
hydrocarbon processing in Louisiana levied by the legislature under its general26
authority to tax provided by Sections 1 and 2 of this Article to be paid by the27
owner or proportionately by the owners of the hydrocarbons at the time any28
plant, building, construction, structure, or equipment located in Louisiana is29 SB NO. 432
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first used to process them.1
(ii) If the legislature levies such tax, the revenues derived from the tax2
shall be distributed as follows:3
(aa)(I) First, to be distributed to any governing authority of a parish or4
to any fund entitled to a distribution of the severance tax on oil and gas5
pursuant to Sections 4(B)(2), 10.2, and 10.3 of this Article so that such authority6
or fund shall receive the same amount to which the authority or fund would7
have been entitled before the severance tax was reduced or repealed pursuant8
to the provisions of Sections 4(B)(2) of this Article, unless such authority or fund9
has been reimbursed by an appropriation made specifically for such purpose.10
(II) The legislature shall further provide that if the distribution to a11
governing authority of a parish required by Section 4(B)(2) of this Article12
cannot be made because the tax has been placed in an escrow account pending13
the outcome of litigation concerning the tax levied by this Section, the first14
distribution to such authority shall bear interest at the rate actually earned by15
the fund during the litigation.16
(bb) Second, the remainder of the revenue shall be first used to comply17
with the requirements of Article VII, Section 9(B) of the Constitution of18
Louisiana relative to the Bond Security and Redemption Fund, and then shall19
be distributed as follows:20
(I) One third shall be appropriated to the Department of Transportation21
and Development solely for the costs of projects for the construction,22
reconstruction, or repair of state highways, roads, or bridges which are23
included in the priority list of projects pursuant to the final highway24
construction priority program as provided by R.S. 48:231, any mega project25
from Priority List A through D of the department's Louisiana Statewide26
Transportation Plan, and for maintenance of state highways, roads, or bridges.27
(II) One third shall be deposited in the Coastal Protection and28
Restoration Fund provided for in Section 10.2 of this Article and shall be used29 SB NO. 432
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as provided for in that Section.1
(III) One third shall be appropriated by the legislature solely to or for2
the use of primary and secondary schools, colleges and universities, and other3
post secondary education institutions.4
(iii) Notwithstanding Article III, Section 16(B), a bill to levy such tax may5
originate in the Senate.6
Section 2. Be it further resolved that Article IX, Section 9 of this constitution is7
hereby repealed.8
Section 3. Be it further resolved that this proposed amendment shall be submitted9
to the electors of the state of Louisiana at the statewide election to be held on November 2,10
2010.11
Section 4. Be it further resolved that on the official ballot to be used at said election12
there shall be printed a proposition, upon which the electors of the state shall be permitted13
to vote FOR or AGAINST, to amend the Constitution of Louisiana, which proposition shall14
read as follows:15
To repeal the severance tax on oil and gas and allow a tax upon hydrocarbon16
processing in Louisiana; to require revenues to be derived from the tax to be17
distributed as follows: first, to any governing authority of a parish and to the18
Atchafalaya Basin Conservation Fund, the Coastal Protection and19
Restoration Fund, and the Budget Stabilization Fund which are currently20
entitled by the Constitution of Louisiana to a distribution of the severance tax21
on oil and gas and so that such authority or fund shall receive the same22
amount to which the authority or fund would have been entitled before the23
severance tax was reduced or repealed pursuant to this constitutional24
amendment; second, to be distributed one third for the costs of projects for25
the construction, reconstruction, or repair of state highways, roads, or bridges26
which are included in the priority list of projects pursuant to the final27
highway construction priority program as provided by R.S. 48:231, any mega28
project from Priority List A through D of the department's Louisiana29 SB NO. 432
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Statewide Transportation Plan, and for maintenance of state highways, roads,1
or bridges; one third to the Coastal Protection and Restoration Fund to be2
used as provided for in fund law; and one third solely to or for the use of3
primary and secondary schools, colleges and universities, and other post4
secondary education institutions.5
(Amends Article VII, Section 4(B) and repeals Article IX, Section 9)6
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Riley Boudreaux.
DIGEST
Marionneaux (SB 432)
Present constitution prohibits the levy of a tax other than severance tax on "oil, gas, or
sulphur leases or rights."
Proposed constitutional amendment provides for a repeal of all severance taxes which are
levied on oil and gas and their derivatives effective July 1, 2011 and allows a "hydrocarbon
processing tax" on oil and gas. Defines "hydrocarbon processing tax" as a tax upon the use
of hydrocarbon processing in Louisiana levied by the legislature under the general authority
to tax provided to it Art. VII, Secs. 1 and 2 to be paid by the owner or proportionately by the
owners of the hydrocarbons at the time any plant, building, construction, structure, or
equipment located in Louisiana is first used to process them.
Present constitution, Art. VII, Sec. 4(D) requires one-fifth of the severance tax on oil and gas
to be remitted to the governing authority of the parish in which severance or production
occurs and, in certain circumstances, to the Atchafalaya Basin Conservation Fund, up to a
certain maximum. Certain amounts of severance taxes are also required to be deposited to
the Coastal Protection and Restoration Fund and to the Budget Stabilization Fund.
Proposed constitutional amendment provides that if the legislature levies such tax, it must
dedicate revenues derived from the tax to be used as follows:
First, to be distributed to any governing authority of a parish or to any fund entitled to a
distribution of the severance tax on oil and gas pursuant to Art. VII, Secs. 4(B)(2)
[Atchafalaya Basin Conservation Fund], 10.2 [the Coastal Protection and Restoration Fund],
and 10.3 [Budget Stabilization Fund] so that such authority or fund receives the same
amount to which the authority or fund would have been entitled before the severance tax was
repealed by the proposed constitutional amendment, unless such authority or fund has been
reimbursed by an appropriation made specifically for such purpose. Further, the legislature
must provide that if the distribution to a governing authority of a parish required by Section
4(B)(2) cannot be made because the tax has been placed in an escrow account pending the
outcome of litigation concerning the tax levied by this Section, the first distribution to such
authority shall bear interest at the rate actually earned by the fund during the litigation.
Second, the remainder of the revenue must be first used to comply with the requirements of
the Bond Security and Redemption Fund, and then must be distributed as follows:
One third shall to be appropriated to the Department of Transportation and Development
solely for the costs of projects for the construction, reconstruction, or repair of state
highways, roads, or bridges which are included in the priority list of projects pursuant to the
final highway construction priority program as provided by R.S. 48:231, any mega project SB NO. 432
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from Priority List A through D of the department's Louisiana Statewide Transportation Plan,
and for maintenance of state highways, roads, or bridges.
One third to be deposited in the Coastal Protection and Restoration Fund to be used as
provided for in that fund's law.
One third to be appropriated by the legislature solely to or for the use of primary and
secondary schools, colleges and universities, and other post secondary education institutions.
Proposed constitutional amendment repeals the First Use Tax Trust Fund.
Specifies submission of the amendment to the voters at the statewide election to be held on
November 2, 2010.
(Amends Const. Art. VII, Sec. 4(B) and repeals Const. Art. IX, Sec. 9)