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2015 Regular Session
SENATE BILL NO. 177
BY SENATOR ADLEY
TAX/AD VALOREM. Constitutional amendment to add certain property tax exemptions
and reductions and to provide with respect to tax credits associated with them; to dedicate
the net state revenue increase to a Tax Credit Reduction Fund and provide for allocations
from the fund; and to provide for appropriations to local tax authorities. (2/3-CA 13sl(A))
1 A JOINT RESOLUTION
2 Proposing to amend Article VII, Section 18(B) and (D), and to add Article VII, Section
3 10.15, Section 21(C)(20) and (21), and Section 21.1 of the Constitution of Louisiana,
4 relative to ad valorem property tax exemptions and reductions; to provide for an
5 exemption for certain inventory and natural gas and vessels; to provide for the
6 valuation and assessment of telephone company property; to provide with respect to
7 the adjustment of ad valorem millages because of the implementation of the
8 amendment; to provide for annual effectiveness of the exemptions and reductions;
9 and to specify an election for submission of the proposition to electors and provide
10 a ballot proposition.
11 Section 1. Be it resolved by the Legislature of Louisiana, two-thirds of the members
12 elected to each house concurring, that only if the Legislative Auditor provides written
13 certification to the Secretary of State that funds have been appropriated by the legislature in
14 a law which has become effective which, upon receipt by an ad valorem property taxing
15 authority, will be sufficient to offset the decrease in the total amount of ad valorem taxes
16 collected by such taxing authority because of the implementation of the provisions of this
17 proposed amendment, then there shall be submitted to the electors of the state, for their
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1 approval or rejection in the manner provided by law, a proposal to amend Article VII,
2 Section 18(B) and (D), and to add Article VII, Section 10.15, Section 21(C)(20) and (21),
3 and Section 21.1 of the Constitution of Louisiana, to read as follows:
4 §10.15. Tax Credit Reduction Fund
5 Section 10.15.A. Each fiscal year beginning with Fiscal Year 2015-2016,
6 the Revenue Estimating Conference shall determine the net increase in taxes
7 collected during each fiscal year because of the effect on income and franchise
8 tax credits provided by law on the initial effective date of this Section of the
9 implementation of the ad valorem property tax exemptions provided for in
10 Section 23(C)(20) and (21) of this Article and the reduction of the percentage of
11 the fair market value of telephone company properties subject to assessment as
12 provided for in Section (B)(5) of this Article. Such determination shall be
13 approved by the Joint Legislative Committee on the Budget.
14 B.(1) After compliance with the requirements of Section 9(B) of this
15 Article relative to the Bond Security and Redemption Fund and prior to any
16 money being placed into the general fund or any other fund, an amount equal
17 to that determined by the Revenue Estimating Conference and approved by the
18 Joint Legislative Committee on the Budget shall be credited by the treasurer
19 each fiscal year to a special fund hereby created in the state treasury to be
20 known as the Tax Credit Reduction Fund. The money in the fund shall be used
21 solely as provided for in Paragraph (C) of this Section.
22 (2)(a) The money in the fund shall be invested by the treasurer in the
23 same manner as money in the state general fund and interest earned on the
24 investment of the money shall be credited to the fund after compliance with the
25 requirements of Section 9(B) of this Article relative to the Bond Security and
26 Redemption Fund.
27 (b) All unexpended and unencumbered money in the fund at the end of
28 the year shall remain in the fund.
29 C. The money in the Tax Credit Reduction Fund shall be used solely as
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1 follows in the following priorities:
2 First, the money in the fund shall be appropriated by the legislature each
3 fiscal year to fund the Minimum Foundation Program in an amount sufficient
4 to ensure that each city and parish school system receives its proportionate
5 amount of funding allocated to the system as provided in the Minimum
6 Foundation Program Formula approved by the legislature during the 2015
7 Regular Session of the Legislature, or the most recently approved formula prior
8 to such Session, including the combined state and local contributions. It is the
9 intention of this provision that no city and parish school system shall have its
10 Minimum Foundation Program Formula allocation reduced as a result of the
11 effect of the implementation of the ad valorem property tax exemptions and
12 reductions referenced in Paragraph (A) of this Section on such city and parish
13 school system's contribution.
14 Second, the balance of money remaining in the fund after the allocation
15 provided in the first Subparagraph of this Paragraph shall be appropriated by
16 the legislature for any purposes as determined by the legislature.
17 * * *
18 §18. Ad Valorem Taxes
19 Section 18. * * *
20 (B) Classification. The classifications of property subject to ad valorem
21 taxation and the percentage of fair market value applicable to each classification for
22 the purpose of determining assessed valuation are as follows:
23 Classifications Percentages
24 1. Land 10%
25 2. Improvements for residential purposes 10%
26 3. Electric cooperative properties, excluding land 15%
27 4. Public service properties, excluding land 25%
28 5. Telephone company properties, excluding land 15%
29 6. Other property 15%
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1 The legislature may enact laws defining electric cooperative properties and
2 public service properties. "Telephone company property" shall mean the
3 property owned or used in the state in the operation of a company primarily
4 engaged in the business of transmitting telephone messages within, through,
5 into, or from this state; however, the term "telephone company property" shall
6 not include the property of any company that:
7 (1) Primarily is engaged in the business of owning, operating, or
8 managing a radio common carrier as shall be defined by law, or a public "for
9 hire" radio service.
10 (2) Primarily is engaged in the business of providing a service of radio
11 communications between mobile and base stations, between mobile and land
12 stations, or between two or more mobile stations, including but not limited to
13 any cellular service, paging service, or other forms of mobile or portable
14 communications service.
15 * * *
16 (D) Valuation. Each assessor shall determine the fair market value of all
17 property subject to taxation within his respective parish or district except public
18 service properties and telephone company properties, which shall be valued at fair
19 market value by the Louisiana Tax Commission or its successor. Each assessor shall
20 determine the use value of property which is to be so assessed under the provisions
21 of Paragraph (C). Fair market value and use value of property shall be determined
22 in accordance with criteria which shall be established by law and which shall apply
23 uniformly throughout the state.
24 * * *
25 §21. Other Property Exemptions
26 Section 21. In addition to the homestead exemption provided for in Section
27 20 of this Article, the following property and no other shall be exempt from ad
28 valorem taxation:
29 * * *
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1 (C) * * *
2 (20) Inventory held by manufacturers, distributors, and retailers, and
3 natural gas held, used, or consumed in providing natural gas storage services
4 or operating natural gas storage facilities.
5 (21) Vessels, including ships, oceangoing tugs, towboats, and barges,
6 principally operated in Outer Continental Shelf Lands Act Waters. "Outer
7 Continental Shelf Lands Act Waters" shall mean all waters above all
8 submerged land seaward and outside of the area of state submerged lands
9 beneath navigable waters as defined in the Submerged Lands Act, 43 U.S.C.
10 §1301 et seq. The term shall further mean all waters above Outer Continental
11 Shelf submerged lands to which the Outer Continental Shelf Lands Act of Title
12 43 U.S.C. §1331 et seq. applies.
13 * * *
14 §21.1. Effectiveness of certain exemptions and assessment reductions
15 The exemptions provided for in Section 21(C)(20) and (21) of this Article
16 and the valuation of telephone company properties at fifteen percent of fair
17 market value provided for in Section 18(B)(5) of this Article shall only be
18 effective for a Tax Year in which the Legislative Auditor provides written
19 certification to the Louisiana Tax Commission that funds have been
20 appropriated by the legislature in a law which has become effective which, upon
21 receipt by an ad valorem property taxing authority, will be sufficient to offset
22 the decrease in the total amount of ad valorem taxes collected by such taxing
23 authority because of the operation of those provisions. The appropriation shall
24 be a direct appropriation to state aid to local government for which local
25 government determines the expenditure. The provisions of Article VII, Section
26 10(F)(1) and (2) shall not be applicable to nor affect such appropriations.
27 Section 2. Be it further resolved that the provisions of this proposed amendment shall
28 apply retroactively to the Tax Year 2015 so that, notwithstanding any other provision of this
29 constitution or other law to the contrary requiring the assessment and collection of ad
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1 valorem taxes by an earlier date, the Louisiana Tax Commission and assessors shall exempt
2 or reassess property according to the terms of this proposed amendment and any ad valorem
3 property taxes and associated charges paid for such tax year not in accordance with the terms
4 of this proposed amendment shall be refunded.
5 Section 3. Be it further resolved that a decrease in the total amount of ad valorem
6 taxes collected by a taxing authority because of the implementation of the provisions of this
7 amendment shall not authorize the taxing authority to adjust its millages as provided for in
8 Article VII, Section 23 of the Constitution of Louisiana.
9 Section 4. Be it further resolved that, providing for a matter related to the ad valorem
10 property tax exemptions and reductions provided for in this proposed amendment,
11 notwithstanding Article III, Section 16(B) or any other provision of this constitution or any
12 other law to the contrary, any claim for an income tax or corporate franchise tax credit for
13 ad valorem property taxes paid on the property provided for in this proposed amendment
14 shall not be allowed in Fiscal Year 2015-2016. One-tenth of each such tax credit shall be
15 allowed to a claimant each Fiscal Year thereafter, beginning in Fiscal Year 2016-2017.
16 Section 5. Be it further resolved that only if the Legislative Auditor provides written
17 certification to the Secretary of State that funds have been appropriated by the legislature in
18 a law which has become effective which, upon receipt by an ad valorem property taxing
19 authority, will be sufficient to offset the decrease in the total amount of ad valorem taxes
20 collected by such taxing authority because of the implementation of the provisions of this
21 proposed amendment, then this proposed amendment shall be submitted to the electors of
22 the state of Louisiana at the statewide election to be held on October 24, 2015.
23 Section 6. Be it further resolved that on the official ballot to be used at said election
24 there shall be printed a proposition, upon which the electors of the state shall be permitted
25 to vote YES or NO, to amend the Constitution of Louisiana, which proposition shall read as
26 follows:
27 Do you support an amendment to exempt from property tax the inventory
28 held by manufacturers, distributors, and retailers, natural gas held, used, or
29 consumed in providing natural gas storage services or operating natural gas
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1 storage facilities, and vessels principally operated in Outer Continental Shelf
2 (OCS) waters; to provide that telephone company properties shall be assessed
3 at 15% of fair market value; to provide that the exemption and reduction are
4 applicable only in tax years in which the Legislative Auditor provides written
5 certification to the Louisiana Tax Commission that funds have been
6 appropriated by the legislature in a law which has become effective which,
7 upon receipt by an ad valorem property taxing authority, will be sufficient to
8 offset the decrease in the total amount of ad valorem taxes collected by such
9 taxing authority because of the operation of these provisions; to provide that
10 ad valorem tax millages shall not be raised because of the implementation of
11 the amendment and that any claim for a tax credit for taxes paid on such
12 property shall not be allowed in Fiscal Year 2015-2016, but one-tenth shall
13 be allowed each Fiscal Year thereafter; and finally to provide that the net
14 increase in state taxes collected as a result of such exemptions and reductions
15 shall be deposited in a Tax Credit Reduction Fund, a portion to be used to
16 ensure that no school system shall have its Minimum Foundation Formula
17 allocation reduced as a result of the effect of such exemptions and
18 reductions?
19 (Amends Article VII, Section 18(B) and (D); adds Article VII, Section 10.15,
20 Section 21(C)(20) and (21), and Section 21.1)
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Riley Boudreaux.
DIGEST
SB 177 Engrossed 2015 Regular Session Adley
Proposed constitutional amendment provides that any claim for an income tax or corporate
franchise tax credit for ad valorem property taxes paid on the property provided for in the
proposed constitutional amendment shall not be allowed in Fiscal Year 2015-2016. One-
tenth of each such tax credit is allowed to a claimant each Fiscal Year thereafter, beginning
in Fiscal Year 2016-2017.
Proposed constitutional amendment requires the Revenue Estimating Conference, each fiscal
year beginning with FY 2015-2016, to determine the net increase in taxes collected during
each fiscal year because of the effect on income and franchise tax credits of the ad valorem
property tax exemptions and reductions set forth below provided in the proposed
constitutional amendment. Such determination must be approved by the Joint Legislative
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Committee on the Budget. That amount is credited by the Treasurer to a special fund created
in the state treasury to be known as the Tax Credit Reduction Fund. The money in the Tax
Credit Reduction Fund must be used solely as follows in the following priorities:
First, the money in the fund shall be appropriated by the legislature each fiscal year to fund
the Minimum Foundation Program [MFP] in an amount sufficient to ensure that each city
and parish school system receives its proportionate amount of funding allocated to the
system as provided in the MFP Formula approved by the legislature in the 2015 Regular
Session, or the most recently approved formula prior to such Session, including the
combined state and local contributions. The proposed constitutional amendment states that
its intention is that no city and parish school system shall have its MFP Formula allocation
reduced as a result of the effect of the implementation of the proposed constitutional
amendment on such city and parish school system's contribution.
Second, the balance of money remaining in the fund must be appropriated by the legislature
for any purposes as determined by the legislature.
The money in the fund is to be invested by the Treasurer in the same manner as money in
the state general fund and interest earned on the investment of the money is credited to the
fund. All unexpended and unencumbered money in the fund at the end of the year is to
remain in the fund.
Present law allows a refundable income or corporate franchise tax credit for ad valorem
property taxes paid on:
(1)Inventory held by manufacturers, distributors, and retailers, and on natural gas held,
used, or consumed in providing natural gas storage services or operating natural gas
storage facilities.
(2)Vessels, including ships, oceangoing tugs, towboats, and barges, principally operated
in Outer Continental Shelf Lands Act Waters.
Proposed constitutional amendment exempts the same property from ad valorem property
taxes.
Present constitution requires property classified as "public service properties, excluding
land" to be assessed by the Louisiana Tax Commission at 25% of fair market value and
authorizes the legislature to enact laws defining "public service properties".
Present law defines one of the "public service properties" as the property owned or used but
not otherwise assessed in the state in the operations of a "telephone company". "Telephone
company" is defined as a company primarily engaged in the business of transmitting
telephone messages within, through, into, or from this state, but excludes from the term any
company that:
(1)Primarily is engaged in the business of owning, operating, or managing a radio
common carrier, as defined in present law, or a public "for hire" radio service.
(2)Primarily is engaged in the business of providing a service of radio communications
between mobile and base stations, between mobile and land stations, or between two
or more mobile stations, including but not limited to any cellular service, paging
service, or other forms of mobile or portable communications service.
Present law allows a refundable income or corporate franchise tax credit for 40% of the
aggregate ad valorem property taxes paid by a "telephone company" as defined in present
law on the telephone company's "public service properties" as defined in present law which
are assessed by the Louisiana Tax Commission at 25% of fair market value pursuant to
present law.
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Proposed constitutional amendment requires property classified as "telephone company
properties, excluding land" to be assessed by the Louisiana Tax Commission at 15% of fair
market value. Defines "telephone company property" as the property owned or used but not
otherwise assessed in the state in the operation of a company defined using the same
language in the proposed constitutional amendment as "telephone company" is defined in
present law.
Proposed constitutional amendment requires retroactive application to Tax Year 2015 so that
the Louisiana Tax Commission and assessors must exempt or reassess property according
to the terms of the proposed constitutional amendment and any ad valorem property taxes
and associated charges paid for such tax year not in accordance with the terms of the
proposed constitutional amendment must be refunded.
Present constitution requires all property subject to ad valorem property taxation to be
reappraised and valued at intervals of not more than four years.
Present constitution provides that the total amount of ad valorem property taxes collected
by any taxing authority in the year in which property is reappraised and revalued shall not
be increased or decreased because of a reappraisal or valuation above or below the total
amount of ad valorem taxes collected by that taxing authority in the year preceding
implementation of the reappraisal and valuation.
Proposed constitutional amendment provides that a decrease in the total amount of ad
valorem property taxes collected by a taxing authority because of the implementation of the
proposed constitutional amendment shall not authorize the tax authority to adjust its millages
as provided in the present constitution as set forth above.
Specifies submission of the amendment to the voters at the statewide election to be held on
October 24, 2015, only if the Legislative Auditor provides written certification to the
Secretary of State that funds have been appropriated by the legislature in a law which has
become effective which, upon receipt by an ad valorem property taxing authority, will be
sufficient to offset the decrease in the total amount of ad valorem taxes collected by such
taxing authority because of the implementation of the provisions of this proposed
amendment.
Similarly, the proposed constitutional amendment provides that it shall only be effective for
a Tax Year in which the Legislative Auditor makes the same written certification described
above, and further, that the appropriation must be a direct appropriation "to state aid" to local
government for which local government determines the expenditure. The provisions of
Const. Art. VII, Sec. 10(F)(1) and (2) (concerning methods for adjusting appropriations in
order to eliminate a projected deficit) are not applicable to nor do they affect such
appropriations
(Amends Const. Art. VII, Sec. 18(B) and (D); adds Const. Art. VII, Sec. 10.15, Sec.
21(C)(20) and (21), and Sec. 21.1)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the original bill
1. Expanded the Original Bill, which exempted only inventory held by
manufacturers, distributors, and retailers, and natural gas, to include all of the
other matters set forth in the Digest above.
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