Louisiana House Bill HB38

Louisiana 2020 1st Special Session

• Introduced: 6/5/20
• Refer: 6/5/20

Caption

(Constitutional Amendment) To authorize local taxing authorities to enter into cooperative endeavor agreements for the purpose of payments in lieu of taxes (Item #28) (OR SEE FISC NOTE LF RV See Note)

Impact

If enacted, this bill would amend existing laws governing ad valorem taxation by allowing more flexibility for local taxing authorities to negotiate terms that suit their local economic conditions. This is a significant shift from the current constitution, which provides a more rigid framework regarding tax exemptions. The ability to create these agreements could lead to more competitive local tax policies and potentially attract new non-residential development that might otherwise be deterred by high property taxes.

Summary

HB38 proposes an amendment to the Louisiana Constitution that would authorize local taxing authorities to enter into cooperative endeavor agreements with owners of non-residential immovable property for payments in lieu of taxes. This amendment is designed to enhance local governments' abilities to negotiate tax arrangements that can incentivize business development and economic growth within their jurisdictions. The maximum duration of these agreements would be capped at 40 years, ensuring long-term commitments but also setting a definitive limit on the timeframe for these tax arrangements.

Sentiment

The sentiment surrounding HB38 is mixed. Supporters, particularly among local government officials and business advocates, view the bill as a necessary tool for local economic development that would empower local authorities to tailor tax incentives to attract businesses. However, there are concerns about the implications of such flexibility; critics argue that this could undermine the uniformity of tax policy and lead to potential disparities between different localities, which may provoke tension over equitable taxation practices.

Contention

Notably, there is contention regarding the requirement that any laws enacted to administer this provision must receive a two-thirds vote from both houses of the legislature. This stipulation is expected to draw scrutiny, as it raises questions about the balance of power between local authorities and the state legislature. Additionally, there are apprehensions about how such provisions might affect the overall revenue for local governments, especially if successful negotiations lead to substantial tax exemptions that impact funding for local services.