The idea of cutting taxes always plays well when state lawmakers gather for their annual session. The populist notion of "helping out the little guy" by reducing his tax burden resonates with voters, so it's not surprising that Louisiana lawmakers filed more than 200 bills to cut taxes (read: reduce state revenues) for the annual session that begins this week. We urge lawmakers to show restraint in cutting taxes during these difficult economic times. It will be tough enough to balance the state budget with taxes at their present levels. Cutting taxes further will require deeper cuts in health care, higher education, public safety and other vital government services.
Of all of the tax-cutting measures, a proposal by state Sen. John Alario, D-Westwego, to double the homestead exemption has garnered the most attention. Louisiana already has the highest homestead exemption in the nation; most homeowners here pay no local property taxes on the first $7,500 in the assessed value of their homes. (Residences are assessed at 10 percent of market value, which means the first $75,000 in market value is tax exempt for owner-occupied dwellings.) Under Alario's proposed constitutional amendment, homeowners would pay no property tax on the first $15,000 in tax-assessed value.
On the surface, that may strike many homeowners as a fine idea, but ultimately someone has to pay. The Louisiana Constitution requires that any change in the homestead exemption be revenue neutral. Thus, if the homestead exemption rises, the millage rates on those who still pay property taxes will have to rise as well to make up the difference.
That means businesses and renters will see their property tax bills increase dramatically. That, in turn, would adversely affect commerce and economic development efforts — and increase the burden (via higher rents) on those who cannot afford to own their own homes. Higher rents would be particularly onerous in New Orleans, which has a significantly higher ratio of renters to homeowners than surrounding parishes. Moreover, in these difficult times, state government should be doing everything it can to encourage business growth and investment in Louisiana. Shifting more of the local property tax burden to businesses does the opposite. Moreover, with large cuts in social services looming, the working poor can ill afford a higher cost of living.
A report by the Bureau of Governmental Research concludes that doubling the homestead exemption would trigger a dramatic hike in some property taxes. In New Orleans, for example, the millage rate would increase by 8 percent. Jefferson Parish would see a 17 percent jump — from 47.96 mills to 56.17 mills. St. Tammany Parish, which has a large number of homes valued at more than $75,000, would feel an overall increase of 34 percent — but certain special taxing districts, such as Fire Protection District No. 8 (covering Abita Springs), would face a 62 percent spike in the millage rate.
John LeBlanc, tax director for the Louisiana Association of Business and Industry (LABI), says businesses currently pay 80 to 90 percent of the property taxes in Louisiana. "Why don't we just rename [property tax] the business property tax," LeBlanc says. Keep in mind, if businesses leave Louisiana for states with lower property taxes, it will mean fewer jobs and less overall revenue to the state, which will only increase pressure to raise taxes again on those still here.
What everyone needs to recognize is that taxes need, more than anything else, to be fair. In tough times such as these, shifting the local property tax burden to businesses and renters is fundamentally unfair.
Brossett for State Rep
In the special election to succeed J.P. Morrell as state representative from House District 97, we recommend Jared Brossett. The runoff is this Saturday (May 2). Brossett has worked in city government as an assistant to former Councilman (now Criminal Sheriff) Marlin Gusman and to current Councilwoman Cynthia Hedge-Morrell. He has the support of the Alliance for Good Government and a good grasp of the issues. We urge our readers in House District 97 to elect Jared Brossett on Saturday.