Effort to increase homestead exemption fails

State Sen. Caleb Kleinpeter deferred his call for voters to consider a constitutional amendment to increase property tax exemptions. (Photo by Avery White / LSU Manship School News Service)

BATON ROUGE — An amendment that would allow parishes to increase the homestead exemption failed 9-5 in a House committee hearing Tuesday while a Senate committee heard but deferred two similar homestead-exemption amendments.

The House Ways and Means Committee did not advance House Bill 440, which would have allowed parishes to increase the exemption up to an additional $5,000 of the assessed value, or a maximum of $125,000 off the market value.

“At a time when we have rising insurance premiums and a rising cost of living, this provides an immediate, tangible financial relief to Louisiana families,” said state Rep. Candace Newell, D-New Orleans, who wrote the bill.

The current exemption is $7,500, which has not been increased since 1980.

State Rep. Beth Billings, R-Destrehan, and state Rep. Roger Wilder, R-Denham Springs, were concerned that parishes would increase property taxes for business owners and owners of higher-value property to make up for losses in revenue.

“The money that we bring in is going to be pushed onto the businesses because that money still has to come from somewhere,” Billings said. “And we're going to see — or could see — a patchwork of 64 different parishes and create a nightmare for the tax commission who has to coordinate all of that.”

Jim Patterson, senior vice president of government relations for the Louisiana Association of Business and Industry, opposed the bill for its possible impact on businesses. He said it could encourage them to move out of the state.

Newell later commented that businesses have already started leaving the state, and “we ain’t doing nothing to keep them here.”

The vote was split along party lines, with state Rep. Les Farnum, R-Sulphur, being the only Republican who voted to advance the bill.

Newell’s amendment would have required approval of a homestead exemption from the parish government and a parish-wide election.

State Rep. Marcus Bryant, D-New Iberia, who supported the bill, said “I think it’s a great idea because the locals have the power to decide or not decide, and we just give them that right.”

In a Senate Revenue and Fiscal Affairs Committee meeting at the same time, state Sens. Caleb Kleinpeter, R-Port Allen, and Gregory Miller, R-Norco, voluntarily deferred their bills after hearing concerns that increasing the homestead exemption would harm middle-class residents and small businesses.

Kleinpeter’s Senate Bill 7 called for an amendment to the state constitution allowing parishes to increase the exemption by $5,000 to raise it as high as $12,500 of the assessed value, or a maximum $125,000 off the market value. Miller’s Senate Bill 88 called for a statewide amendment that would allow increases up to $30,000 of the assessed value.

Kleinpeter said the amendment would have allowed parishes in better financial shape to provide a tax break to homeowners.

He said as a former member of the West Baton Rouge Parish Council, he voted to reduce property tax rates because there was more than enough money to balance the budget, including education expenses.

Todd Dugas, the tax assessor of St. Martin Parish, said reducing unnecessary expenses could allow parishes to give residents a tax break.

“The more money I give my wife, the more money she spends,” Dugas said. “And I think that is the same with parish government.”

State Sen. Eddie Lambert, R-Gonzales, agreed that a higher exemption could help older residents who have had their property value increase over decades and now struggle to afford the tax, but he was concerned as to how parishes could make up revenue without increasing tax rates.

“Somebody has to pay more,” Lambert said. “I think that’s what eventually is going to happen.”

State Sen. Jay Luneau, D-Alexandria, favored how the amendment could lower the tax burden of low-income homeowners but had the same financial concerns as Lambert.

“The fact of the matter is, if we're going to cut this, we're either going to cut services, or we're going to increase somebody else's taxes,” Luneau said.

Dugas told the committee, “It’s not going to make you pay any more taxes,” and an increase in the property tax rate would be spread across all properties, including commercial buildings.

Since commercial buildings do not have a homestead exemption and pay a higher property tax rate, Lambert said a parish choosing to increase the homestead exemption could harm small business owners.

Lambert later suggested Louisiana could reduce property owners’ tax burden by removing the homestead exemption to “get everybody’s skin in the game,” then lowering the property tax rate.

Kleinpeter clarified that SB 7 was meant to give parishes that could afford a reduction in revenue the power to increase the homestead exemption, and in those parishes, tax rates would not need to increase.

Luneau said political pressure from residents could influence parishes who could not afford to increase the exemption, and “that reshuffle is going hit the middle class hard and it's going to hit industry.”

Miller’s amendment, which would have allowed increases of the exemption up to $300,000 of market value, would have required parishes to absorb the loss in tax revenue.

After hearing the discussion on Kleinpeter’s bill, Miller postponed a vote to a later meeting.

Guy Cormier, the director of the Police Jury Association of Louisiana, suggested the amendments include approval from the sheriff, school board, parish government and a parish-wide vote.

If one of these amendments were to advance from committee and pass with a two-thirds vote in both the House and Senate, a majority of Louisiana voters would need to approve it in the Nov. 3 election.