The hurricane-recovery/stratospheric-oil-price driven
Louisiana economy was the basis for the enactment of tax reductions and
continuing the trend of recent sessions of legislatively granting more
exemptions, deductions and credits for individuals and businesses.
Unless otherwise indicated, the bills below are from the
2008 Regular Session.
The BIG KAHUNA of course was Senate Bill 87 by
Senator Shaw (Act 396). It restored the pre-Stelly Act income tax
rates and brackets. The bill is effective January 1, 2009, but a provision in
the bill prohibits the Department of Revenue from changing the withholding
tables to reflect the reduction until July 1, 2009 (the beginning of the fiscal
year). This, of course, limits the fiscal impact before that time since most
taxpayers (or payroll divisions) will not reduce tax withholdings from paychecks
until the official tables are published. For the Special Session, a close second
in popularity was Senate Bill 5 of the 2008 2nd Ex. Session by
Senator Marionneaux (Act 8) which provides for a non-refundable state
income tax deduction for 50% of the actual amount of tuition and fees paid for
private elementary and secondary schools and university lab schools per child,
or $5,000 per child, whichever is less. Also includes payments for school
uniforms, textbooks, curricula, or other instructional materials, and school
supplies required by schools. Public school students also get a similar
deduction for these items. Home schooled children get a similar deduction for
textbooks and curricula necessary for home-schooling of each child.
The Legislature acted to preempt some possible tax burdens
which would have been an unpleasant surprise to most Louisiana taxpayers.
House Bill 18 of the 2008 2nd Ex. Session by Representative Greene
(Act 5) provided that the federal economic stimulus rebate checks would
not reduce the federal income tax deduction, and therefore, increase
Louisiana income tax. Senate Bill 520 by Senator Morrish (Act 463)
prohibits an action to collect sales taxes on purchases between 9/1/05 and
12/31/06 of certain manufactured homes used as residences in a list of parishes
which the Legislature determined were impacted by Hurricanes Katrina and Rita,
if the basis of the collection was an inadvertent failure to immediately file a
"declaration of immovability" (which would have made the transaction
non-taxable) in the conveyance or mortgage records.
The Governor and the Legislature decided to accelerate
some of the exemptions that had been originally set for a more lengthy
phase-out. House Bill 1 of the 2008 2nd Ex. Session by
Representative Greene (Act 1) finally restored exemptions against
sales tax for business purchases of electricity, natural gas, water, and steam
and included an exemption for business purchases of butane and propane as well.
Senate Bill 10 of the 2008 2nd Ex. Session by Senator Marionneaux
(Act 10) accelerated the phase-out of corporate franchise tax on
"borrowed capital" by one year, by excluding all "borrowed capital" from
"taxable capital" for tax years beginning in 2011 (instead of 2012) and
thereafter. Senate Bill 12 of the 2008 2nd Ex. Session by Senator
Marionneaux (Act 12) accelerated the phase-out of state sales taxes
on manufacturing machinery and equipment by one year, making the purchase or
lease of such machinery and equipment beginning 7/1/09 and thereafter tax free.
Not an acceleration, but lagniappe, House Bill 9 of the 2008 2nd
Ex. Session by Representative Richmond (Act 4) provided an additional
$50 million of new markets tax credits for businesses and non-profits.
Responding to complaints that the state and local
governments have been slow to refund taxes and make rebates under incentive
contracts, the Legislature enacted House Bill 416 by Representative Ellington
(Act 720) which requires the Department of Revenue to make 80% of
Enterprise Zone sales tax rebates within 10 business days of a request that
contains copies of invoices over $15,000. Ten days after a 3-month period during
which the department may audit, the remainder must be rebated less amounts
disallowed. Local Enterprise Zone and Quality Jobs sales tax rebates must be
made 90 days after request with copies of all invoices. Senate Bill 445 by
Senator John Smith (Act 456) reduces the amount of annual average
purchases or leases necessary for certain taxpayers to receive a "Direct Payment
Number" and authorizes those receiving certain tax exemption contracts from the
Board of Commerce and Industry, upon approval of the governor, to receive a DP
Number for exempt contract purchases rather than wait for refunds or rebates.
House Bill 579 by Representative Jane Smith (Act 826) provides for a
30-day time limit for refunds ordered by a final administrative decision or a
A question which caused the filing of many bills and lots
of discussion was whether it was fair for a taxpayer to bear the cost of audits
and litigation by private auditors and private attorneys employed by the state
and local tax collectors. Current law authorizes tax collectors to charge
taxpayers 10% of amounts found due if a claim is referred to a private attorney
for collection. Senate Bill 290 by Senator Kostelka (pending House Ways &
Means) would have limited the ability to charge the 10% to taxpayers only on
amounts of tax not paid under protest. House Bill 747 by
Representative Robideaux (pending Senate Revenue and Fiscal Affairs)
would have prohibited compensation of private auditing firms on a contingency
basis or any other basis dependent on the outcome of an examination and would
have required an hourly rate agreed to in advance of the audit, placed certain
professional requirements on their lead auditors, and prohibited them from
performing assessment or collection functions. The bill also would have limited
the cost charged to a taxpayer for an audit or examination performed by the tax
authority itself to 10% of the amount determined to be due. Senate Bill 288
by Senator Kostelka (Act 857) prohibits the employment of private
counsel by the tax commission on a contingency fee basis.
When the Uniform Local Sales Tax Code was enacted, it
contained several provisions calling for uniform interpretation of local sales
tax ordinances and rules. Senate Bill 329 by Senator Adley (Act 762)
provides for proceedings, including an arbitration proceedings, to determine
whether a taxpayer or a tax collector is asserting an interpretation of a rule,
regulation, policy, or interpretation of sales tax law, or ordinance which
violates the requirement in the Uniform Local Sales Tax Code.
Capital Outlay Reform:
For some time the press and outside nonpartisan
public/business interest groups have been pressing for Capital Outlay Reform.
There has also been agreement among legislators that the time for some reform of
the process is overdue. As a response, Senate Bill 808 by Marionneaux (Act
911) and House Bill 582 by Representative Tucker (pending Senate
Revenue and Fiscal Affairs) were filed, each proposing a version of such
reform. At the end of the process, Act No. 911 was enacted. It greatly enhances
the authority of the commissioner of the division of administration [hereafter
"DOA"] and the division's office of facility planning and control [hereafter,
"the office"] in the capital outlay process and, at the same time, limits the
amount of funding which the projects of "non-state entities" (i.e. political
subdivisions or NGO's [non-governmental organizations]) might receive, as
1. Authorizes the office to require "the information
necessary for" a true "feasibility study" for all projects requested by
"non-state" entities [as originally required by the Louisiana Constitution] -
and then authorizes the office to establish: the standards and procedures to
determine such "feasibility; a system for comparatively evaluating projects
based on the "feasibility" and merits of the projects; a system of
"categorization" of projects; and then a priority ranking of projects.
2. Prohibits the legislature from funding any project of a
"non-state" entity which has not certified that it does not have a source
of funds available to fund the project and deletes the Joint Legislative
Committee's authority to allow a project of a non-state entity requesting
funding of $1 million or more and submitted after the November 1st
deadline to be included in the capital outlay bill.
3. Authorizes the office of facility planning and control
to determine whether a project has complied with the laws concerning
feasibility, timeliness, and other requirements and to report those findings to
the Joint Legislative Committee on Capital Outlay, the House Committee on
Appropriations, the House Committee on Ways and Means, the Senate Committee on
Finance, and the Senate Committee on Revenue and Fiscal Affairs.
4. Requires a match of not less than 25% of the total
requested amount of funding for projects of "non-state entities" except:
(a) A project deemed by the commissioner of
administration to be an emergency project.
(b) A project of a non-state entity which has
demonstrated its inability to provide a local match according to rules
promulgated by the division of administration establishing a needs-based
formula for determining such inability.
5. Limits general obligation bond funding of "non-state
projects" to no more than 25% of the "cash line of credit capacity for projects"
in any fiscal year. The "cash line of credit capacity for projects" in a fiscal
year is defined in the same manner as it has been informally interpreted in
previous years - that is, that is $200 million annually adjusted for
construction inflation from 1994. [A provision in the bill prohibits raising the
limit except by a 2/3's vote of the elected members of each house of the
6. Defines "non-state projects" as those projects not
owned and operated by the state except projects determined by the commissioner
of administration to be "regional economic development initiatives"or "regional
health care facilities operated in cooperation with the state".
Act 911 has retained a roll for the legislature.
The Act authorizes the division of administration to promulgate rules and
regulations it deems necessary for the implementation of the above provisions;
but requires them to be approved by the House Committee on Appropriations, the
House Committee on Ways and Means, the Senate Committee on Finance, and the
Senate Committee on Revenue and Fiscal Affairs before they are
promulgated. In addition, the Joint Legislative Committee on Capital Outlay is
specifically authorized to "make recommendations" to the commissioner of
administration concerning non-state entity projects to be granted lines of
credit. Requires the commissioner to submit to the committee a list of projects
that will be submitted to the State Bond Commission for lines of credit a
minimum of five days prior to the submission to the State Bond Commission.
Another important provision of Act 911 requires any
project to be funded through the sale of bonds and secured by or payable from a
state appropriation to be included in a separate section of the capital outlay
act entitled "appropriated debt projects" or, as an alternative, the Act
allows such a project to be considered between sessions by authorizing its
submission by the division to the Interim Emergency Board, and its approval by a
majority vote of the elected members of each house of the legislature by mail
ballot. Authorizes requests to sell bonds for such projects to be submitted to
the State Bond Commission for review and approval only after such legislative
approval is obtained.