LMR April 2021

the exemption was granted.
Most other southern states have far more restrictive programs
for granting such an exemption. Arkansas generally
caps exemptions at 65% and only allows more for extremely
competitive projects, and neither Mississippi nor Alabama
allow for school district property taxes to be exempted under
their programs. In Texas, the property tax limitation on
school millages requires review by the State Comptroller
before local consideration; and when the property tax limitation
is approved for school millages, counties are made
whole for lost property tax revenues by the state through
reimbursement claims made through the Texas Education
Agency. Even the Tax Foundation described Louisiana’s ITEP
as, “unusually generous.”
This session, instead of attempting to rescind local input in
ITEP applications, it appears that legislative leaders may offer
to trade constitutional protection of local input on ITEP and
a cap on ITEP exemption in exchange for the abolition of the
much-maligned inventory tax on property.
The ad valorem tax on property, including inventory, is a
critical component of local government revenue, and a necessity
in funding essential local services: education, fire and
police protection, transportation infrastructure, and utilities,
to name a few. This tax was expressly approved by voters and
has been in place since the 1930s. The inventory tax credit,
on the other hand, is a legislative creation that was enacted
some 60 years later. Any budgetary difficulties suffered by the
state related to this ad valorem tax is due to the state’s desire
to issue the credit, not the tax itself.
Any attempt to “repeal” the inventory tax – creating yet another
exemption to ad valorem taxation – is inherently problematic
because of the diversity among local government
revenue bases, as well as the Minimum Foundation Program
formula that supports public education. Proposing a constitutionally
protected cap on ITEP as a backfill for the massive
revenue losses from abolishing the inventory tax will likely be
no different, though local government stakeholders await the
fiscal impact studies associated with that proposal.
Many attempts at inventory tax elimination have amounted
to shifting the tax burden from businesses to other taxpayers.
When the Louisiana Tax Commission studied possible
repeal-and-replace solutions, Chairman Lawrence Chehardy
concluded, “It’s our opinion that there is no workable course
to follow in which the lost revenue to local government can
be replaced in a way that is practical and affordable to other
taxpayers.”
You Are Our Most Valued Advocacy Partners
Though this is a fiscal session, there may be as many at 720 bills
of general subject matter, so we are mindful of preemption
efforts to limit or abolish local authority regarding regulatory
matters. Local leaders are directly accountable to their constituent
friends
and neighbors,
so they are in the
best position to
tailor local policies
and solutions.
Further,
the fiscal preemptions
arising
from mandatory
tax exemptions/
exclusions are
especially troubling
considering
the many
unfunded mandates
imposed
on local governments.
As municipal
officials
and leaders, you
feel this more
acutely than
most. It is that
deep connection
that makes
your legislative
messaging so
powerful.
Legislative advocacy is a core mission of the LMA, and we are
committed to educating both legislators and the public on
the importance of municipal government and the challenges
faced by local leaders. The engagement of our members with
their legislators, however, is a crucial part of our success at
the Capitol.
Throughout the year – but particularly during legislative sessions
– you may receive Call to Action emails from the LMA
Legislative Advocacy Team. We sincerely appreciate your response
and immediate contact with your representatives and
senators, and the results of your participation are tangible. If
you are at the Capitol on a legislative matter, please let any
member of the LMA Legislative Advocacy Team know, so that
we can visit with you and acknowledge your participation.
This year, we will celebrate our annual LMA Municipal Day
and Crawfish Boil on May 5 in Baton Rouge. This occasion
provides a perfect opportunity for our members to visit with
their legislative delegation while receiving important legislative
briefings and lobbying tips from our team. In the meantime,
you can access all legislation online at the Louisiana
Legislature’s website, www.legis.la.gov, and can view which
instruments we are tracking under the Legislative Advocacy
tab at www.lma.org.
Page 12
LMR | APRIL 2021