Louisiana Senate Bill SB16

Louisiana 2016 1st Special Session

• Introduced: 2/18/16
• Refer: 2/18/16

Caption

Constitutional amendment to provide for ad valorem taxes paid on certain property. (Item #31)(2/3 - CA13s1(A)) (OR SEE FISC NOTE GF RV)

Impact

If passed, the legislation will significantly alter how local government revenues are generated, as it mandates exemptions that would potentially reduce taxable income from businesses within the state. The establishment of the Local Investment Fund is intended to provide financial support to local entities by reallocating state sales and use tax revenues to compensate for losses due to these exemptions. The fund aims to distribute revenue based on property valuations across parishes, thus influencing funding distributions statewide and ensuring that local governing bodies can still maintain functional budgets despite reduced ad valorem tax revenues.

Summary

Senate Bill 16 proposes a constitutional amendment concerning ad valorem taxes in Louisiana, particularly focusing on the taxation of inventory held by manufacturers, distributors, and retailers, as well as vessels operated in certain waters. The bill aims to eliminate refundable income and corporate franchise tax credits for ad valorem taxes paid on such inventories, allowing exceptions only for small tax payments below $10,000. Furthermore, it establishes the Local Investment Fund, which will help offset revenue losses for local governments associated with these tax exemptions. The bill's implementation is set to take effect from January 1, 2017.

Sentiment

The sentiment surrounding Bill SB16 is mixed, highlighting a divide between interests that seek to protect local tax bases and those advocating for reduced tax burdens on businesses. Supporters argue that this amendment would enhance economic operability for manufacturers and distributors by lowering tax barriers, encouraging investment and growth. Conversely, critics express concerns over the implications for local government funding, fearing that these tax exemptions may erode necessary funding for essential services and infrastructure in various communities, leading to potential fiscal instability.

Contention

The main points of contention regarding SB16 center on the balance between incentivizing business growth and preserving local government revenue streams. Proponents claim that reducing onerous tax requirements will promote economic activity and job creation, while opponents highlight the risks of local governments losing vital funding sources necessary for public services and infrastructure. This divergence emphasizes the broader debate in state governance about how best to structure tax policy to simultaneously support economic growth while meeting the diverse needs of local populations.