Scott McKay wrote an excellent piece today about how Louisiana needs to change its homestead exemption so that local governments can start generating their own revenue instead of relying on the state. We have one lawmaker who disagrees and wants to increase the homestead exemption.
State Rep. Bryan Adams (R-Gretna) has filed HB 59, which would raise the homestead exemption from $75,000 to $100,000. Not only that, he would index it to inflation which means the homestead exemption would likely go up after every reappraisal.
What this would do is shift more of the property tax burden onto businesses. It would continue to feed the cycle of corporate welfare, special tax breaks, and relying on the state to fund parish and local government.
As Scott noted in his piece today, the way to fix Louisiana’s long-term fiscal problems is to make local and parish government more self-reliant. The days of the state being able to fund all levels of government through oil money are over. Louisiana has too many constitutionally protected funds and there is no will among the legislature to call a constitutional convention to eliminate them.
Cities and parishes are limited to what kind of funds they can raise. They’re limited to usually three sources of funding; sales taxes, hotel/motel taxes (in some areas), and property taxes. Property taxes are handicapped by the homestead exemption and as a result, they fall disproportionately on businesses and renters. Anyone who will have their rent raised can thank Representative Adams.
HB 59 is a constitutional amendment so it would have to get two-thirds vote in both houses. In this session, that will be a challenge. But, it won’t matter because Adams can go back to his constituents and say he tried to lower their property taxes.
The biggest problem with this bill is the same as the all other tax exemptions. It takes people’s skin out of the game and they vote like welfare recipients. They vote for new, unsustainable spending without thinking about the consequences. That’s part of the reason Louisiana is in the fiscal mess that it’s in.
If Louisiana is serious about fixing its fiscal mess, it would defeat HB 59.