Wednesday, June 19, 2024

Louisiana voters reject constitutional amendments focused on government spending and a new tax break, approve five others

by BIZ Magazine

By David Jacobs | The Center Square

Louisiana voters rejected two of the seven constitutional amendments that were on Tuesday’s ballot.

Amendment 4 sought to limit the potential growth of state spending. Amendment 5 would have created a new tax break for local governments to offer manufacturers. Both were voted down.

Current law includes a spending limit that compounds each year and seldom comes into play during the budget process. Amendment 4 would have capped annual spending growth at 5 percent and added other factors meant to make the limit more restrictive.

The changes would not have cut the state’s budget but might have made it more difficult for lawmakers to increase state government spending. Lawmakers would have been able to lift the cap with a two-thirds vote in both chambers, so if a majority of legislators wanted to spend enough to exceed the cap, a minority would have been able to block that effort or demand concessions in exchange for their votes.

Amendment 5 drew the most opposition of any amendment on the ballot. It would have created a new process for local taxing authorities to negotiate deals with a manufacturer to make payments in lieu of property taxes (PILOTs) the company otherwise would owe. In theory, local governments could let the company pay less in property taxes as an incentive to move to their jurisdiction or expand there, while using the up-front money for infrastructure or other immediate needs.

Supporters said the new form of PILOT could be an economic development tool for local governments that is more flexible than the state’s Industrial Tax Exemption Program. Critics, such as the left-leaning group Together Louisiana, saw it as yet another avenue for corporate tax breaks that shift the tax burden onto regular citizens.

Voters approved the other five amendments, including:

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

Abortion is not currently protected by the state constitution, so there is no immediate impact on abortion rights in the state.

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: Changes how property taxes on oil wells are assessed by allowing the well’s production to be a factor.

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.

Amendment 3: Allows the Budget Stabilization Fund, better known as the “rainy day” fund, to be used to pay for state costs incurred during a federally declared disaster.

The fund historically has been a savings account that lawmakers used to plug holes in the state budget when revenue falls short. 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.

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 will be able spend the interest but not the principal.

Also on Tuesday, voters in most Louisiana parishes approved legalizing sports betting in their areas, though it won’t actually be legal anywhere in the state for a while. Lawmakers next year will have to set up the regulations and tax rates.

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