The original instrument and the following digest, which constitutes no part of the legislative
instrument, were prepared by Riley Boudreaux.
DIGEST
SB 15 Original 2015 Regular Session Nevers
Present constitution prohibits the levy of a tax other than severance tax on "oil, gas, or sulphur leases
or rights".
Proposed constitutional amendment authorizes the levy of the tax on the use of hydrocarbon
processing facilities despite this prohibition.
Proposed constitutional amendment provides that the tax on the use of hydrocarbon processing
facilities begins to be collected on January 1, 2016.
Proposed constitutional amendment defines "hydrocarbon" as a chemical compound containing
atoms of both carbon and hydrogen, including but not limited to crude oil, condensate, natural gas,
natural gas liquids, and any refined petroleum products.
Petrochemicals, coal, lignite, materials derived from agriculture or forestry products, and nitrogenous
fertilizers are not defined as "hydrocarbons". "Petrochemicals" are defined as products other than
refined petroleum products and which are typically single chemical compounds produced from a
chemical process in which petroleum is used and which are used as materials in the manufacture of
other finished products. "Petrochemicals" are specifically defined to include but not be limited to the
following: acetylene, ethylene, propylene, butylene, butadiene, benzene, toluene, xylene, methanol,
or any other mixture or derivative of such petrochemicals.
"Hydrogen processing facility" is defined as any plant, building, construction, structure, or equipment
located in Louisiana and which is used to perform all or a part of a very broadly defined list of
processes, procedures, or operations which encompass every aspect of the production, treatment,
transportation, refining, and processing of hydrocarbons. However motor vehicles, railway cars,
ships, barges, and vessels are not considered "facilities". In addition, "hydrocarbon processing"
specifically excludes the direct venting or flaring into the atmosphere of gas produced from oil or
gas wells.
Proposed constitutional amendment levies the tax at the rate of 4% of the price or value of
condensate, crude oil, including any natural gas liquids or condensate contained therein, and natural
gas and natural gas liquids, which undergo hydrocarbon processing in a hydrocarbon processing
facility within the state.
A credit against the tax is granted to owners who have paid to this state or another state of the United
States a tax on the severance from the soil or water of hydrocarbons, if the severance tax is based
upon the value of such hydrocarbons at the time and place of severance. Proposed constitutional amendment exempts oil and gas from stripper and incapable-type wells
whether in or outside of the state.
Proposed constitutional amendment provides for the tax to be paid by the owner or proportionately
by the owners of the hydrocarbons at the time facilities located in this state are first used to process
them, and the rate of usage is measured at that point.
Duplication of the tax is prohibited, in that:
(1)Once any owner has paid all or his proportionate share of the tax due on hydrocarbons owned
by him, no further tax is due from him or from any subsequent owner of his interest for the
subsequent use of facilities to process the same hydrocarbons or derivatives of those
hydrocarbons.
(2)A credit against the tax is granted to owners who have paid a similar tax to another state of
the United States for using hydrocarbon processing facilities to process hydrocarbons
subsequently imported into Louisiana. The credit is granted only if the state grants a similar
credit.
Proposed constitutional amendment requires owners or operators of processing facilities to collect
the tax. Purchasers of hydrocarbons upon which the tax has not been paid are required to deduct the
amount of the tax before making payments to the owner. If they are not collected or withheld, they
are themselves liable for the tax.
The taxes operate as a first lien and privilege on the hydrocarbons, and the lien follows the
hydrocarbons into the hands of third persons whether in good or bad faith, and whether the
hydrocarbons are found in a manufactured or unmanufactured state.
The Department of Revenue administers the tax in the same manner and according to the same
procedures provided by law and regulations to the department for the administration of other taxes,
including but not limited to laws concerning the imposition of interest and penalties. In addition,
the legislature is authorized by approval of two-thirds of the elected members of each house of the
legislature to provide by law for the administration, enforcement, and collection of the tax, including
but not limited to laws providing for time of payment of the tax, and changes in the administration,
enforcement, and collection procedures set forth above. No other exemptions, deductions, credits,
or refunds are allowed against the tax.
Proposed constitutional amendment prohibits political subdivisions from levying a tax "on or related
to hydrocarbon processing or the use of facilities for such processing".
Proposed constitutional amendment repeals the First Use Tax Trust Fund provisions and establishes
the Hydrocarbon Facilities Tax Fund and requires the money in the fund to be used each fiscal year
solely for the following purposes, however, the amounts required must be proportionally increased
or decreased each fiscal year to reflect tax collections above or below the total amount of
appropriations required as set forth below. (1)$300 million must be appropriated to the Board of Regents for distribution to public
institutions of post secondary education according to the formula for equitable distribution
of funds to such institutions provided for in Const. Art. VIII, Sec. 5(D)(4) of the constitution.
The money appropriated by the legislature must not displace, replace, or supplant
appropriations from the general fund or other funds for such purposes made prior to the
appropriations required by this part of the proposed constitutional amendment.
(2)$250 million must be appropriated for the maintenance of and in an effort to improve health
outcomes in the following health care areas:
(a)Adult disability and aging services.
(b)Developmental disabilities services.
(c)Primary and preventive health care services.
(d)Public health services.
(e)Substance abuse and mental health services.
(f)Health care services provided via the Medicaid program operated by DHH.
(g)Health care services provided at the current and former state hospitals operated by
the LSU Health Care Services Division.
The money appropriated must not displace, replace, or supplant appropriations from the state
general fund for such health care services below the amounts appropriated to provide such
services in the 2015-2016 Fiscal Year.
(3)$80 million must be appropriated each fiscal year to the state Department of Education for
distribution to each school district in the state in an amount sufficient to fund a board-
approved early childhood or prekindergarten program in all public elementary schools to
educate children who are younger than the minimum age provided by law for entrance to first
grade. The money appropriated must not displace, replace, or supplant appropriations from
the general fund or other funds for early childhood or prekindergarten programs in public
elementary schools made prior to the appropriations required by this part of the proposed
constitutional amendment.
(4)$250 million must be appropriated by the legislature to the Louisiana State Employees'
Retirement System and the Teachers' Retirement System of Louisiana for the amortization
of the retirement systems' unfunded accrued liability as required by Const. Art. X, Sec.
29(E)(2)(c) until the Public Retirement Systems' Actuarial Committee provides written
certification to the Treasurer that such unfunded accrued liability is eliminated. The payment
must be in addition to any payments required by Const. Art. X, Sec. 29(E)(2)(c) and Art. VII,
Sec. 10(D)(2)(b). The allocation between the two systems must be in proportion to the balance of the unfunded accrued liability of each system. The payments to the public
retirement systems cannot be used to reduce the actuarially-required employer contributions
to the systems, cannot be included in system assets for purposes of determinations with
respect to cost-of-living increases, nor can they be used, directly or indirectly, to fund
cost-of-living increases.
(5)$150 million must be deposited in the Transportation Trust Fund to be used as in the manner
authorized by that provision.
Proposed constitutional amendment requires the Treasurer to deposit $250 million each fiscal year
in the general fund beginning in the fiscal year after he receives written certification from the Public
Retirement Systems' Actuarial Committee that the unfunded accrued liability is eliminated. For all
tax years beginning on and after January first of the fiscal year after the Treasurer receives such
written certification, the state individual and joint income tax schedule of rates must be uniformly,
permanently reduced to reflect the savings to the state's general fund of both of the following:
(1)The payment required above of $250 million each fiscal year replacement for revenue lost
because of such reduction in the tax rates.
(2)The revenue that will no longer be needed from the state general fund each fiscal year to
make the annual employer contributions actuarially-required by Const. Art. X, Sec.
29(E)(2)(c) in order to eliminate such liability. The amount of such savings upon which the
reduction in the tax rates is to be based must be the average of the amount of the last 10 fiscal
years' contributions made which were paid from the state general fund.
All unexpended and unencumbered money in the fund at the end of the year remains in the fund and
income earned on investments of the money is credited to the fund.
Proposed constitutional amendment contains a severability clause.
Specifies submission of the amendment to the voters at the statewide election to be held on October
24, 2015.
(Amends Const. Art. VII, Sec. 4(A), (B) and (C); adds Const. Art. VII, Sec. 4.1; repeals Const. Art.
IX, Sec. 9)