In The News › Amendment limits some tax increases

Oct 20, 2010

Source: The Times-Picayune

Filed under: On the Ballot, Taxation & Assessments

Amendment limits some tax increases

It restricts ‘rolling forward’ millages

Wednesday, October 20, 2010
By Mark Waller
The Times-Picayune

Constitutional Amendment No. 4 represents what its author calls a “baby step” toward limiting the confusing and sometimes controversial practice of local governments seizing more tax money from rising property values. It would cap increased collections at 2.5 percent more than the previous year’s revenue for some appointed taxing boards.

When values rise after a major reassessment once every four years, in turn increasing tax bills for property owners, local governments are required to roll back their tax rates, measured in millages, to levels that produce the same amount of cash they were receiving before the reassessment. But then the taxing authorities have the option to reverse course and roll forward their millages up to the rates previously approved by voters and capture more money from home and business owners with higher property assessments.

Critics of the system describe it as allowing tax increases without taxpayer approval because the public gets no vote on whether agencies roll forward and collect the additional cash. When officials promote new taxes, they often make their cases using straight dollar amounts that need to be raised for specific goals, leaving voters less aware of the underlying millages that eventually will generate more money than the initial proposals required, said state Rep. Jeff Arnold, D-New Orleans, author of the amendment.

“It’s really a baby step in the direction I’d like to see,” said Arnold, who sponsored the legislation creating the amendment in 2009. “Ideally I’d rather see it apply to everybody. But we had to make compromises to get it passed.”

If Louisiana voters approve the amendment on Nov. 2, small, appointed rural boards with taxing authority, such as library boards or water boards, would feel most of the effects, Arnold said. Some of the most recognizable appointed taxing authorities in metropolitan areas, such as fire districts, ports and some levee districts, are exempt from the amendment, also because of a compromise.

In developing the legislation, Arnold said he received support from business groups, notably the Louisiana Association of Business and Industry and the Northshore Business Council.

“It’s a substantial burden on businesses when real estate taxes go up,” said John LeBlanc, tax director for the business and industry association. “In default it says, ‘If you want more, go put it on the ballot. It may remain unstated, but that’s the result.”

Howard Daigle, who tracks legislative issues for the Northshore Business Council, also described the amendment as a start that falls short of the ultimate goal. The process of rolling forward millages will likely remain abstruse to many people, he said.

“It starts off well-intentioned but by exception guts the intent of it,” he said about the amendment.

Arnold said he expected friction from groups representing local governments, who might argue agencies need the opportunity to gather more revenue to counter inflation. But the distinction between appointed taxing authorities and elected ones seems to be softening potential resistance.

Tom Ed McHugh, executive director of the Louisiana Municipal Association, said the group would fight any proposal to suppress the power of elected officials to roll forward millages because voters get the opportunity to pass judgment on their decisions at election time. The municipal association is taking no position on this provision applying only to certain appointed officials.

Barry Erwin, president of the Council for a Better Louisiana, a government watchdog group that often opposes tinkering with property tax laws, said targeting appointed officials for this restriction makes it mostly noncontroversial. The council might oppose any proposal to expand restrictions on taxing bodies beyond those outlined in the amendment but likely won’t fight this measure.

Another watchdog group, the Bureau of Governmental Research, said it usually criticizes state limitations on local financial decisions, but it took no position on this amendment because the case for such limits is stronger when applied only to appointed officials.

Oct 20, 2010

Source: The Times-Picayune

Filed under: On the Ballot, Taxation & Assessments

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