Property taxes are one of the most irksome forms of taxation.  There are many drawbacks to them.

Property assessments can be, and often are, arbitrary, subjective processes, dictated by the whims of assessors.  The Louisiana law regarding assessments pretty much says it all:

‘Fair market value is defined by LA Revised Statute § 47: 2321 as follows:

‘Fair Market Value is the price for a property which would be agreed upon between a willing and informed buyer and a willing and informed seller under the usual and ordinary circumstances; it shall be the highest price estimated in terms of money which property will bring if exposed for sale on the open market with reasonable time allowed to find a purchaser who is buying with knowledge of all the uses and purposes to which the property is best adapted and for which it can be legally used’ (‘How does the assessor determine my home’s Fair Market Value for assessment purposes?,’ stcharlesassessor.com).

This is more akin to the pagan practice of divination by examining dead animal guts than it is a just and rational way to calculate someone’s tax bill.

Furthermore, if a citizen disagrees with said tax bill that the parish assessor lays upon him, the assessor is assumed to be in the right; all of the burden is on the citizen to prove otherwise and to navigate the bureaucratic labyrinth that has been set up to arbitrate disputes:

‘As a taxpayer, you have a certain legal responsibility to furnish accurate information on your property. Our office welcomes all information provided by the property owner. If you have complied with these legal requirements, you are entitled to question the value placed on your property. If your opinion of the value of your property differs from the Assessor’s, you may come to our office to discuss the matter in person. Be prepared to show evidence that the Assessor’s valuation of the property is incorrect. Our staff will be glad to answer your questions about the Assessor’s appraisal. If, after discussing the matter with the Assessor, a difference of opinion still exists, you may appeal your assessment to the Ouachita Parish Board of Review according to procedures and published deadlines. After reviewing your appeal, if the Board agrees with the Assessor and a difference of opinion still exists, you may appeal the Board’s decision to the Louisiana State Tax Commission. If the Commission agrees with the Board and the Assessor, you can plead your case before the courts should you choose to do so’ (‘Help / FAQ,’ opassessor.com).

How would a car mechanic or a school teacher ever find the time and/or money to make it through that appeal process?

And the coup de grâce:  If one fails to pay his property taxes (for whatever reason), his property is taken from him by the government.

With all that said, we also recognize that property taxes have been around for centuries and that they are very helpful for local governments in raising funds for critical services (education, emergency response, etc.).  In the spirit of improving the system rather than burning the whole thing down, let’s see if we can find some ways to reform it, to make it more bearable for the property owners who are carrying so much of the tax load for local government.

First and most importantly, votes on property taxes must limited to property owners.  This is akin to the closed political primaries that have recently been re-enacted in Louisiana:  Just as Democrats can’t vote in Republican primaries and vice versa, so also those who don’t pay property taxes shouldn’t have a say when determining property tax levies; allowing them to do so is an act of injustice.

Second, property tax increases could be capped.  California voters famously did this in 1978 with Prop 13, though this seems to create new problems of its own.  Circuit breakers, which lower property taxes if they exceed a certain percentage of an owner’s income, are another option.

Third, a sovereign wealth fund (SWF) could be established by the State of Louisiana that would reimburse Louisiana property owners at least a portion of the amount they paid in property taxes.  Norway has perhaps the most famous SWF, and President Trump has proposed establishing one at the federal level in the US, but one of our sister States, Alaska, also has a very robust fund, upon which Louisiana could model her own.  (Technically, Louisiana already has an investment fund like this, the Louisiana Education Quality Trust Fund, but its focus is limited.  Nevertheless, the experience in operating it should help in establishing a broader SWF.)

At the foundation of Alaska’s SWF is her mineral deposits, mainly hydrocarbons:

‘Ten years after Alaska achieved statehood, oil was discovered on the North Slope and the young state was suddenly rich. With the understanding that Alaska’s new oil wealth would not last forever, residents created the Alaska Permanent Fund in 1976 so this non-renewable resource [there is evidence that at least some oil deposits are renewable—W.G.] would provide benefits to current and future generations. Four years later, the Alaska Legislature created the Alaska Permanent Fund Corporation to prudently manage the Fund. After more than 40 years of wise management, APFC has grown the Permanent Fund to more than $80.8 billion’ (‘History,’ apfc.org).

Louisiana is likewise rich in hydrocarbons, so it shouldn’t be difficult for us to quickly raise the principal to establish our own SWF via royalties and severance taxes, which would benefit everyone in the State in perpetuity:

‘The Permanent Fund has become a key renewable financial resource for Alaskans, with the annual 5% POMV draw providing more than 55% of Alaska’s general fund revenue stream.

‘Per Alaska Statute 37.13.140(b), enacted in 2018, withdrawals from the ERA are based on a percentage of the average market value “POMV” of the Fund, a method designed to create a withdrawal structure that ensures no more than a sustainable amount is drawn on an annual basis.

‘The Percent of Market Value (POMV) draw is based on a percentage of the average market value of the Fund for the first five of the preceding six fiscal years; this average creates a smoothing effect across years. The POMV draw provides a certainty of liability for managing the portfolio and a stable, predictable payout from year to year. The draw is subject to appropriation and is set in statute at 5.0%.

‘The POMV draw in FY24 was $3.5 billion, $3.4 billion in FY23, $3.1 billion in FY22, $3.1 billion in FY21, $2.9 billion in FY20, and $2.7 billion in FY19’ (‘Generating Revenue for Today & Tomorrow,’ apfc.org).

Kansas is already at work on an idea to ease the property tax burden via a wealth fund:

‘Kansas Rep. Blake Carpenter (R-District 81) introduced an innovative proposal via House Concurrent Resolution 5014.

‘Rep. Carpenter’s approach would eliminate certain sales tax exemptions, generating approximately $2 billion annually. That money would then flow into a newly established “Freedom From Taxes Fund,” where it would eventually generate enough interest to cover the state’s education funding—which is currently supported by property taxes.

‘This strategy is inspired by Norway’s sovereign wealth fund, which leverages accumulated revenues for public benefit. Rep. Carpenter estimates the Kansas fund could reach $13 to $15 billion within eight years, at which point the annual interest alone would replace roughly $900 million currently raised through property taxes.

‘There’s even promise that the fund could one day offset income taxes in the state’ (Allaire Conte ‘These 4 States Might Eliminate Property Taxes,’ realtor.com).

A sovereign wealth fund that creates dividend checks for all Louisianans could also be a way to ease the burden of other high expenses in the State, like insurance rates.

Louisiana’s insurance costs are getting a lot of attention in this session of the Legislature, but property tax reform is deserving of attention, also.  We would go so far as to propose that a special session be held to establish a Louisiana SWF to take advantage of the Trump White House’s intention to Drill, Baby, Drill, in order to give Louisianans long overdue financial relief sooner rather than later.