In The News › Homestead exemption loses its champion with retirement of Jeff Parish Assessor Lawrence E. Chehardy

Jan 2, 2011

Source: The Times-Picayune

Filed under: Jefferson Parish, Taxation & Assessments

Homestead exemption loses its champion with retirement of Jeff Parish Assessor Lawrence E. Chehardy

Sunday, January 2, 2011
By Mark Waller
The Times-Picayune

The Chehardy name and Louisiana’s distinctive homestead exemption have been intertwined for 45 years.

But the first family of defending and promoting the state’s signature tax break is stepped off the stage with the retirement of Jefferson Parish Assessor Lawrence E. Chehardy on Friday. Newly appointed deputy assessor Ron Maestri, chief operating officer of the New Orleans Zephyrs and a former interim Jefferson Parish Council member, takes over the office until an election for a permanent replacement is held in April.

Chehardy, 57, said he will no longer make his customary trips to Baton Rouge lobbying for a higher exemption, as he did for 34 years, and his predecessor in office — his father — did before him.

Chehardy helped write many of the perennial bills to boost the exemption, but not anymore. If someone asks him to speak up, he’ll still support it, he said, but he won’t lead the charge.

“I believe that someone else will come along and take up that cause,” he said.

“My intent is to not be involved with that kind of political process,” Chehardy said, adding that he plans to spend more time working in his Metairie law practice. “I’m leaving public office and intend to leave that form of public life.”

Voice for tax break

Chehardy said he doesn’t think his departure will clear the way for any immediate changes to the homestead exemption, which shelters $75,000 of property value from taxation for owner-occupied homes. As recently as 2009, it was ranked the highest such exemption in the country.

Proponents and opponents of the tax break are deadlocked, said Chehardy and others who follow the issue, because they are unable to muster the two-thirds support needed in the Legislature to send voters a constitutional amendment raising or reducing the tax shield.

So a benefit that is so ingrained it almost seems to qualify as another Louisiana cultural emblem, alongside having parishes instead of counties and holding an official holiday on Mardi Gras, appears to be safe as its lead spokesman retires.

“He’s the single biggest voice” for the homestead exemption, said state Sen. John Alario, R-Westwego, who routinely worked with Chehardy on homestead bills. “Lawrence kind of inherited that passion for it from his father. His father spearheaded it. We’ll have to see if someone picks up that passion and runs with it.”

“I think status quo is about the best we can expect at this time,” Alario said.

Alario said he, too, is stepping back, ending his annual tradition of introducing bills to raise the exemption.

“I had put that in at the request of Lawrence, out of respect to him and his father,” Alario said. Now, he said, “I’d rather save my powder for another fight.”

Picks up the torch

The Chehardy alliance with the homestead exemption began when Lawrence A. Chehardy became Jefferson assessor in 1965 and made the exemption, which was already in place for decades, his political brand in a parish filling with new homeowners. The strategy helped him wield tremendous influence.

He pushed to strengthen and increase the exemption in the 1974 Louisiana Constitution. Alario said Chehardy’s upgraded exemption was one of the main selling points of the constitution.

Then, in 1977, his son took over as assessor following a colorful political maneuver. Chehardy filed for re-election and was unopposed until three minutes before the end of qualifying, when the Chehardy who was then a 22-year-old law student signed up for the race.

“How do you like your new assessor?” the senior Chehardy asked gathered officials, who soon realized they were witnessing a plot unfold. He then withdrew from the race, bequeathing the job to his son.

The younger Chehardy picked up the torch for the homestead exemption with gusto.

It rose to its current level of $75,000 in 1982 and has been the target of fierce debate since then.

Ongoing battle

Supporters sound the populist notes that the exemption is a simple way to help middle-class people continue participating in the institution of home ownership, which is generally positive for communities.

Critics tie the exemption to some of Louisiana’s greatest perceived failings, saying it stunts public services such as schools by shackling them to the less stable financing source of high sales taxes, also hurting low-income residents, and it stifles economic growth by shifting the property tax burden to businesses and higher-income residents.

The fight most recently heated up in 2009, after the last major property reassessment in most of the state brought a flurry of higher tax bills. Chehardy and Alario proposed raising the exemption to $150,000. Chehardy used his campaign treasury to broadcast advertisements supporting the move.

Meanwhile, Gov. Bobby Jindal endorsed the idea of tying annual increases in the exemption to inflation. But others, such as state Rep. Kevin Pearson, R-Slidell, proposed changing the exemption to require more taxpayers to contribute.

Pearson’s idea was to impose taxes on the first $10,000 of every home’s value and then exempt the next $75,000. That way, he said, every homeowner has to provide some level of support for their communities. He also argued it would ease feelings of unfairness about people with property values near or below $75,000 paying little or nothing.

“Home ownership is a right,” Pearson said. “But I never looked at it as a right without any obligations.”

“It’s kind of like everyone has a little skin in the game, even if it’s a little bit,” under his plan, he said.

Exemption has its critics

Pearson supports one of the major arguments against the homestead exemption, that it shifts more of the tax burden to wealthier residents and businesses, to great economic detriment. Business groups have long made that argument.

“The average business or small business does not get a homestead exemption, or property exemption,” said John LeBlanc, tax director of the Louisiana Association of Business and Industry.

Especially in rural areas with lower property values, he said, the exemption makes it easier for local governments to pass new taxes, because many of the voters don’t have to pay. But businesses do.
“You’ll see signs on somebody’s yard, ‘Vote yes on Saturday because you won’t have to pay for anything,’ “ LeBlanc said.

The Bureau of Governmental Research watchdog group issued a report on raising the exemption in 2009 that also criticized the tax break in general. The report noted that proposals to elevate the covered amount also likely would come with tax rate increases to ensure the plans are revenue-neutral to public services, amounting to a major tax increase for businesses and the affluent.

“It would exacerbate existing inequities and undermine efforts to retain and create jobs,” the report said about raising the exemption.

The group argued there are better ways to achieve the exemption’s early intent, rooted in the Great Depression, to prevent homeowners from losing their homes to tax collectors amid economic distress.

BGR has consistently opposed any blanket homestead exemption,” the report said. “As it has pointed out in the past, hardship cases are better addressed through a carefully crafted program that connects the exemption levels with income levels. Under the current system, all homeowners get the tax break regardless of need. Others, mainly owners and occupants of rental and commercial properties, pick up the tab.”

In 2009, the nonprofit Tax Foundation listed Louisiana as having lowest median homeowner property taxes of all 50 states as well as the lowest property taxes paid as a percentage of home value and as a percentage of income, numbers that got a big assist from the exemption. In 2008 the foundation said Louisiana also had the fourth-highest government dependence on sales taxes.

‘It’s an idea’

Chehardy rejects the arguments that the exemption is unfair and that property taxes are preferable to sales taxes to finance government.

He said businesses enjoy other kinds of tax breaks. And especially in recent economic and real estate market history, he said, property values and the associated taxes are less reliable sources of financing than they are often touted.

Alario said arguments to lower the exemption are undercut by inflation, which lowers it for all practical purposes as years pass with the exemption at the same level.

Other supporters of a higher exemption attack the very principle of property taxes. Joshua Kahler, a Metairie real estate agent, gathered 50,000 signatures on an Internet petition supporting the plans to raise the exemption in 2009.

“I believe in the homestead exemption,” Kahler said. “I believe the right to a home is an absolute right. I don’t believe that anybody really owns a home if a government has a right to take it away,” for nonpayment of taxes.

“It’s not just a monetary amount, it’s an idea,” Kahler said. “It’s a line between individual rights and the powers of government.”

Kahler said he enjoyed working with Chehardy to push for a higher exemption.

“For a tax official to be that pro-taxpayer was very encouraging,” Kahler said.

“I believe that if homeowners and voters in this state are given the chance to approve an increase to the homestead exemption, they would do it,” Chehardy said. “I do not believe they would vote to decrease it.”

“If you lower the homestead exemption, you raise taxes on the middle class,” he said. “It does provide a meaningful tax break to the average person.”

Jan 2, 2011

Source: The Times-Picayune

Filed under: Jefferson Parish, Taxation & Assessments

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