(Editor's Note: This is the final Press-Herald story relating to the nine proposed Constitutional Amendments that will appear on the ballot.)
Amendment 8 on the November 6 ballot would allow Louisiana Board of Commerce and Industry (LBCI) authority to grant limited ad valorem tax exemptions to certain types of businesses creating or expanding operation in Louisiana, which generate the majority of their revenue from outside of the state.
"The purpose of this is to encourage businesses that bring money into Louisiana," state senator Robert Adley said. "It allows [parishes] to choose to participate."
The current Constitution allows for granting similar exemptions to new and expanding manufacturing facilities, however, new service-oriented businesses such as data centers, distribution centers and corporate headquarters currently do not.
Amendment 8, according to the Public Affairs Research Council (PAR) guide to the 2012 amendments, could encourage some service-oriented businesses to open up shop or expand existing operations within the state.
"The proposed amendment would create a limited exemption from local property taxes for certain targeted non-manufacturing businesses in parishes and towns that decide to take part in the program," according to PAR. "The first $10 million of assessed value or 10 percent of the fair market value (whichever is greater) would be taxed. Any value above that would be exempt. In addition, at least 50 percent of the business's sales would have to be to out-of-state customers, or to in-state customers who resell the product out of state, or to the federal government, or some combination thereof."
While the amendment would create the authority to grant the limited ad valorem (property) tax exemption, companion legislation lays out the details.
"Under the provisions of the companion bill (Act 499), an eligible non-manufacturing business would have to build or expand a facility whose primary activities involved serving as a corporate headquarters, a distribution center, a data services center, a research and development operation or a digital media or software development center," according to PAR. "In addition, the business would have to create and maintain at least 50 new direct jobs and make at least $25 million in capital expenditures. The secretary of economic development also would have to make a determination that the property tax exemption would give the state and parish an advantage in a site selection competition versus other states.
"In exchange for a targeted non-manufacturing business meeting these criteria, the state could grant the company a 10-year exemption from all local property taxes," the PAR guide continues. "The exemption would apply only to newly acquired property or newly built facilities. Further, the first $10 million of assessed value or 10 percent of fair market value of the new property, whichever amount is larger, would be taxed normally during the 10-year period."
Numerous limitations are placed on who can benefit from the exemption.
Retail sales, real estate, professional services, natural resource extraction or exploration, financial services, venture capital funds, gaming and gambling businesses would all be ineligible from applying.
Parish and local governments may choose to participate in the exemption, a state level review process must occur and LBCI approve.
"The role of local governments in the program proved to be the most contentious part of the debate over the proposed constitutional amendment," according to PAR. "Legislators finally agreed that before a parish can participate in the program, the parish governing authority, all municipalities within it that levy a property tax, school boards that levy a property tax, the parish law enforcement district and the assessor must agree to take part. If any one of these entities does not agree, the parish cannot be included on the list of potential sites for eligible companies that want to take advantage of the program."
If any of these required entities decide to remove support, a 90-day grace period will be given for existing negotiations to complete after which the exemption will become unavailable in the parish.
Proponents of Amendment 8, according to PAR, say it will encourage a type of business currently uncommon in the state to locate here.
Leaving the ultimate decision to the secretary of commerce and LBCI removes the possibility of potentially contentious local politics, yet placing the decision to offer the exemptions at all in the hands of parish and local governments means their voices will be heard.
"Local parishes could benefit from the jobs created by such companies, as well as from the sales tax revenue and indirect spending generated by a new business," according to PAR. "Further, the first $10 million of assessed value or 10 percent of fair market value (whichever is greater) of the new property still would be taxed. The exemption would apply only to any value above that. All of this would be new revenue that the parish would not otherwise have realized."
Opponents of Amendment 8, according to PAR, say another ad valorem exemption only reduces the already strained coffers of parish and local governments. While the current specifics may provide limitations, because those specifics exist in companion legislation they could be changed with a simple majority vote of the legislature.
They also disagree with removing parish and local government from the final decision.
"Although parish authorities would be able to decide whether to take part in the program, they would have little control other than zoning laws over the types of projects that might be located in their area," according to PAR. "The final decision about whether to grant the property tax exemption would be made at the state level by the secretary of economic development and the Board of Commerce and Industry, not by the local governments that have the most at stake with regard to property taxes."
A vote for Amendment 8 will allow Louisiana Board of Commerce and Industry to grant limited ad valorem (property) tax exemptions to businesses creating new or expanding existing non-manufacturing operations located with Louisiana, whose revenue primarily comes from outside of the state.
A vote against Amendment 8 would prevent such exemptions from being granted.