Sunday, May 26, 2024

Louisiana voters to consider 7 constitutional amendments and gambling referendum

by BIZ Magazine

By David Jacobs | The Center Square

Louisiana voters this fall can add up to seven new amendments to the state constitution. They also will consider allowing sports betting in their parishes. Here’s the rundown:

Amendment 1: Would establish that abortion is not a protected right in the state constitution.

The constitution already does not protect abortion. Louisiana already has a law on the books that would ban abortion if Roe v. Wade, the U.S. Supreme Court decision that established abortion as a constitutional right, is overturned.

This amendment would have no immediate impact. Abortion opponents want to ensure the constitution’s other rights, such as those regarding due process or privacy, are never interpreted in a way that protects abortion rights if Roe v. Wade is struck down. The amendment includes no exceptions for rape, incest or to protect the life of the mother.

Amendment 2: Would change how property taxes on oil wells are assessed.

The oil and gas industry and the state’s assessors, groups that often are at odds, both supported the legislation that led to this amendment, which helps explain why it passed the state House of Representatives and Senate unanimously. The amendment would allow the well’s production to be included in determining its property tax rate, a factor that isn’t currently included.

While low-producing wells may be taxed less, more productive wells could be taxed more. Supporters say overall, taxes on wells won’t go up or down, though the local impact may vary depending on the parish.

“This income approach is the same method used when wells are valued for sale on the open market,” said Daron Fredrickson, who chairs the Louisiana Oil and Gas Association’s tax committee. “It’s common sense that this valuation method should be available for property assessment purposes as well.”

Amendment 3: Would allow the Budget Stabilization Fund to be used to pay for state costs incurred during a federally declared disaster.

Lawmakers tap the Budget Stabilization Fund, commonly known as the “rainy day fund,” to help pay for state services when there’s a revenue shortfall. The amendment would allow lawmakers to use the money to pay for state expenses associated with a federally declared disaster such as a hurricane.

As is currently the case, at least two-thirds of lawmakers in both the House and Senate would have to approve drawing down the fund, and no more than one-third could be spent at a time. Though it was amended along the way, the legislation creating the proposed amendment passed both chambers unanimously.

The change could allow lawmakers to avoid cash flow problems while awaiting federal reimbursement for disaster expenses. But disasters in Louisiana are common, and tapping the fund too often could undermine its original purpose, which is smoothing out the ups and downs of state finances.

Amendment 4: Would change how the state’s expenditure limit is calculated.

Louisiana currently has an expenditure limit that is recalculated each year based on the old limit multiplied by the average personal income growth over the past three years. The amendment would add new factors into the calculation and use the previous year’s spending, not the previous year’s limit, as the baseline. Lawmakers can lift the cap with a two-thirds vote in both chambers.

If voters approve the change, the spending limit would more likely come into play during a legislative session. Supporters say a more restrictive limit will smooth out the ups and downs of state spending and restrain the growth of government.

Critics say tight spending limits can hinder a state’s recovery from a recession by forcing cuts to services. Requiring a two-thirds vote to lift the cap effectively could give a minority of legislators veto power over the state budget, further politicizing the process. Lawmakers, already constrained by various legal and constitutional mandates, would have even less budgeting flexibility.

Amendment 5: Would create a new system whereby local taxing authorities could negotiate payments in lieu of property taxes.

Other than Amendment 1, which focuses on the hot-button topic of abortion, this is probably the most controversial amendment on the November ballot.

Payments in lieu of taxes (or PILOTs) already are available in Louisiana. Businesses agree to make payments to local governments instead of property taxes that otherwise would be owed. When used as an economic development incentive, the amount the business pays through the PILOT typically would be less than would otherwise be owed.

Under current law, the government entity takes legal title to the project and leases it back to the developer; as a publicly owned project, it becomes exempt from property taxes. Amendment 5 would allow the project developer to retain ownership.

The new form of PILOT would be reserved for manufacturers that also are eligible for the state’s Industrial Tax Exemption Program. Companies with an ITEP exemption can avoid paying 100 percent of their assessed property taxes for up to 10 years, though after recent rule changes the maximum benefit is an 80 percent exemption for eight years.

Under the new proposal, a company eligible for an ITEP and a local taxing entity could strike a deal in which the company makes up-front payments in exchange for lower property payments for up to 25 years, well after an ITEP runs out. Local governments could use the money for infrastructure or other immediate needs.

“It’s a tool in the toolbox for local governments,” said Sen. Mark Abraham, who sponsored the enabling legislation.

Critics see the proposal as another corporate welfare loophole that shifts the local tax burden onto ordinary citizens. The PILOTs also could be an avenue for corruption. And local politicians could be tempted to make short-sighted decisions, taking advantage of immediate cash while leaving future administrations to deal with the consequences.

“Twenty-five years is a long time,” Sen. Jay Luneau said.

-Amendment 6: Raises the income threshold to qualify for a property tax assessment freeze

Currently, property tax assessments are frozen for residents 65 or older, the disabled, and surviving spouses of military members killed in action, though they must have $77,030 or less in annual income to be eligible. Amendment 6 would raise the income limitation to $100,000, which would be adjusted for inflation starting in 2026.

-Amendment 7: Creates a dedicated trust fund for unclaimed property

Louisiana’s unclaimed property fund consists of abandoned financial assets such as old checking and savings accounts, unpaid wages, securities, life insurance payouts, uncashed checks, and the proceeds of safe deposit boxes. Historically, lawmakers have spent money left in the fund at the end of the fiscal year.

Amendment 7 calls for the money to be put into an interest-earning fund. Lawmakers could spend the interest but not the principal.

State Treasurer John Schroder was the driving force behind the proposal, which Gov. John Bel Edwards initially opposed. Matthew Block, Edwards’ executive counsel, said the administration dropped its opposition after the legislation was changed to ensure $15 million in annual debt payments for a major road project are protected. The money will flow through the Bond Security and Redemption Fund, like every other dollar the state spends, an accounting practice that reassures the state’s creditors they will be paid first, Block said.

-Parish referendum: Legalizes sports betting in certain parishes

This referendum allows voters to permit legal sports betting in their parish. The proposal does not spell out who would be allowed to bet on sports, where bets would be taken, or what taxes or fees would be involved. Lawmakers would hash out the details next year.

Supporters say legalizing sports betting will help Louisiana’s casinos compete with those in other states that already allow it. They say people are betting on sports already, so lawmakers may as well legalize it and tax it to raise revenue.

Gambling opponents say any expansion of gaming leads to more problem gambling, ultimately creating costs for state taxpayers that far outweigh the benefits.

Note: The Public Affairs Research Council of Louisiana’s annual guide to proposed constitutional amendments was a source for some of the information in this article along with The Center Square’s original reporting. For a more detailed description of each proposal, you can read the guide at PAR’s website.

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