LABI'S Outlook

LABI's Outlook - March 2008

Tax Commission appointments are crucial Some of the most interesting — and revealing — appointments Gov. Bobby Jindal will make will be on the Tax Commission. This regulatory body is, essentially, a five-member panel that should work to ensure that all property taxpayers in Louisiana are treated equitably by the elected parish tax assessors who are in charge of establishing assessments on taxable property.

One of the strong points of former Gov. Kathleen Blanco’s administration was her commitment to appointing Tax Commission members who would hold assessors accountable to having fair and accurate property tax rolls. Some powerful assessors resented being told that they had to assess property as the state constitution intended it to be done — not in the political fashion they had utilized for decades. Needless to say, the assessors who liked the “old way” of doing things were not happy with having their feet held to the fire.

The assessors as a group endorsed Jindal in the recent gubernatorial campaign. They have wasted no time since the election trying to influence his appointments to the Tax Commission. In the very near future, we will find out how successful they have been in their lobbying.

Jindal stressed during his campaign that he wanted to remove inequities in the tax code that put Louisiana businesses at a disadvantage with those in other states. He specifically mentioned removing the state sales tax on business utilities, speeding up the phase-out of the state sales tax on machinery and equipment used in manufacturing, and more quickly removing debt from calculation of the franchise tax. Those actions would certainly help level the playing field that exists between business taxation in Louisiana and other states. If, however, the governor allows the Tax Commission to become overly influenced by assessors, a continuing imbalance in business taxation will become exacerbated and will diminish his objective of making Louisiana more competitive.

The cold, hard fact is that business and commercial interests in Louisiana pay the vast majority of the property taxes collected — more so than in other states. Our highest-in-the-nation homestead exemption is one reason that is the case. Another is the tendency of some assessors to keep assessments on homeowners low, thereby shifting even more of the property tax load onto commercial interests. During the last four years, the Tax Commission fought the good fight to make the assessors abide by the constitution. That struggle often got ugly. Now some assessors who want the power base that “flexibility” in assessments brings are hoping that Jindal will appoint a majority on the commission that will allow them to go back to the old way of doing assessments. The governor will do the state and the constitution a great disservice if he accedes to those assessors’ wishes.

Jindal is absolutely on point in his initiative to further remove some of the tax barriers that prevent Louisiana businesses from competing on an even keel with their competitors in other states. Making our businesses more competitive will strengthen our economy and provide support beneath some current state revenue streams that are tied to the recovery from the hurricanes. If, however, the governor allows the Tax Commission to become an entity that unfairly pushes more of the property tax burden onto businesses, his plans to make Louisiana more competitive in the economic arena will come up short.