2016 First Extraordinary Session ENROLLED
SENATE CONCURRENT RESOL UTION NO. 6
BY SENATOR ALLAIN
A CONCURRENT RESOL UTION
To establish a task force to meet and study state and local taxation laws with respect to local
government funding from ad valorem taxes on inventory, ad valorem taxes on
vessels in Outer Continental Shelf Lands Act Waters, and the state associated tax
credits to identify state and local government funding sources that will fully fund
local and state government and retain and improve the state's business
competitiveness, and report its findings and recommendations.
WHEREAS, the local ad valorem tax, the inventory tax credit, industrial exemptions,
corporate tax rates and complicated business tax structure, rebates, credits and exclusions
have become one of the largest structural problems in the budget of the state of Louisiana
and without reform this tax and the associated Louisiana tax system will continue to be one
of the major drivers of future deficits; and
WHEREAS, Louisiana is one of a minority of states that do not exempt inventory
from ad valorem tax, and, instead, local governments levy and collect ad valorem taxes on
inventory and vessels in Outer Continental Shelf Lands Act Waters and the businesses
paying this tax are reimbursed by the state for the amount of the tax paid via a partially
refundable tax credit on their state income and corporate franchise tax returns; and
WHEREAS, since 2005, Louisiana's gross domestic product has grown by over
twenty-six percent and during that same time, the inventory tax credit has grown by almost
ninety-six percent, outstripping the rate of growth of the overall state economy by more than
three times; and
WHEREAS, in 2014, the state issued inventory credits worth over four hundred
fifty-two million dollars, of which only seventy-six million dollars offset tax liabilities and
over three hundred seventy-five million dollars served as direct cash reimbursements; and
WHEREAS, this money is a direct reduction of state general funds with no
legislative appropriation, oversight or evaluation as a spending priority by the legislature;
Page 1 of 4 SCR NO. 6 ENROLLED
and
WHEREAS, neither exempting inventory from taxation nor eliminating the credit
is a viable solution because exempting inventory from local property tax without an
alternative revenue source would harm the ability of local governments that rely on these
taxes to provide essential services; and
WHEREAS, eliminating the inventory tax credit would subject businesses that pay
this tax to an unsustainable tax burden and significantly decrease Louisiana's
competitiveness; and
WHEREAS, inaction is not an option due to the rate of growth of the tax credit and
its growing impact on the state's fiscal health; and
WHEREAS, if the inventory tax credit continues its current rate of growth, it will
increase to annual expenditure of over one billion dollars within the next eight years, which
could result in either higher taxes or severe budget cuts, the latter of which could ultimately
prove disastrous for the two largest state general fund beneficiaries, higher education and
healthcare.
THEREFORE, BE IT RESOLVED that the Legislature of Louisiana establishes a
task force to meet and do the following:
(1) Examine other states' local government tax structure.
(2) Forecast the long-range impact of the current structure on both state and local
government funding.
(3) Examine economic competitiveness models and reports to determine
recommended best practices.
(4) Recommend comprehensive solutions that will fully fund local government,
reduce or eliminate the growing impact on the state general fund of the state tax credits for
ad valorem taxes on inventory and vessels, and retain or enhance the state's business
competitiveness.
BE IT FURTHER RESOLVED that the task force shall consist of the following
members, who shall serve without compensation except for their reasonable and necessary
expenses related to the performance of their duties as members of the task force or per diem
or expense reimbursement to which they may be individually entitled as members of their
Page 2 of 4 SCR NO. 6 ENROLLED
respective constituent organizations:
(1) Two members of the Senate, to be appointed by the president of the Senate.
(2) Two members of the House of Representatives, to be appointed by the speaker
of the House.
(3) A member appointed by the board of directors of the Police Jury Association of
Louisiana.
(4) A member appointed by the board of directors of the Louisiana Assessor's
Association.
(5) A member appointed by the executive board of the Louisiana Sheriffs
Association.
(6) A member appointed by the executive board of the Louisiana Municipal
Association.
(7) A member appointed by the board of directors of the Louisiana School Boards
Association.
(8) A member appointed by the board of directors of the Louisiana Association of
Business and Industry.
(9) A member appointed by the board of directors of the Louisiana Retailers
Association.
(10) A member appointed by the governing board of the Louisiana Automobile
Dealers Association.
(11) A member appointed by the state director of the Louisiana chapter of the
National Federation of Independent Business.
(12) A member appointed by the board of directors of Louisiana Industrial
Development Executives Association.
(13) A member appointed by the board of directors of the Public Affairs Research
Council of Louisiana.
(14) A member appointed by the members of the Louisiana Tax Commission.
(15) The secretary of the Department of Revenue, or the secretary's designee.
(16) The secretary of the Department of Economic Development, or the secretary's
designee.
Page 3 of 4 SCR NO. 6 ENROLLED
(17) The faculty member with revenue forecasting experience serving on the
Revenue Estimating Conference.
(18) The Legislative Auditor or the auditor's designee.
(19) A representative from the American Federation of Labor and Congress of
Industrial Organizations.
(20) A member appointed by the board of directors of the Offshore Marine Services
Association.
BE IT FURTHER RESOLVED that the task force shall conduct monthly meetings
or as needed and may consider testimony from witnesses and documents produced for
purposes of the task force.
BE IT FURTHER RESOLVED that the meetings of the task force shall be held at
the state capitol and be open to the public, pursuant to the provisions of R.S. 42:12 et seq.
BE IT FURTHER RESOLVED that the members of the Senate and the House of
Representatives shall elect the chairman of the task force, shall prepare the schedules and
agendas for meetings, and coordinate all staff support deemed necessary for the function of
the task force.
BE IT FURTHER RESOLVED that the fiscal division staffs of the Senate and House
of Representatives, Legislative Fiscal Office, Legislative Auditor, the Louisiana Tax
Commission and the Department of Revenue, shall provide any necessary support to carry
out the purposes of the task force.
BE IT FURTHER RESOLVED that this task force shall convene no later than July
31, 2016, and report its findings and recommendations to the president of the Senate and the
speaker of the House of Representatives no later than February 1, 2017.
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
Page 4 of 4