PAR guide to proposed amendments

Voters statewide will be asked to decide yes or no on six proposed amendments to the Louisiana Constitution on the Nov. 8 ballot.
Amendments 2, 3 and 5 are considered particularly significant because of their impact on state policy. They address who will set college tuition levels, the rate and deductions for corporate income taxes and a new trust fund to address state revenue surges.
The proposals were passed during the first special session and the regular legislative session earlier this year. Each bill received at least a two-thirds vote in the House of Representatives and in the Senate and now needs a majority vote at the polls, as required for passage of constitutional amendments.
The governor cannot veto proposals for constitutional amendments.
The Public Affairs Research Council traditionally offers an “independent, non-partisan review” of constitutional amendments, looking at both sides of the issue and explaining what a vote for the amendment will mean and what a vote against it will mean.

Amendment 1
Establishes new requirements for local registrars of voters
A Vote For would require standards of professional and educational experience for local registrars of voters and more public disclosure in their hiring process.
A Vote Against would leave the existing job requirements in place and allow local governing authorities greater discretion when filling registrar vacancies.
State law requires a registrar for each parish appointed by the parish governing authority. The State Constitution allows the Legislature to outline the various powers and duties of a registrar, appropriate compensation levels and the grounds for removal from the position.
While registrar candidates have no work or education requirements, each registrar must be a resident and qualified voter of the parish.
The amendment would allow the Legislature to enact additional qualifications for those applying for vacant registrar positions and create guidelines for local governing authorities seeking and hiring new registrars of voters.
While the amendment itself is fairly simple in allowing this new leeway, the companion legislation — Acts 414 and 360 — give it teeth and detail.
Act 414 requires individuals applying for the position of registrar to meet one of the following requirements:
• a bachelor’s degree from an accredited college or university and at least two years of full-time, professional work experience; or
• an associate degree from an accredited college or university and at least four years of full-time, professional work experience; or
• seven years of full-time, professional work experience; or
• five years of full-time employment in a Louisiana registrar’s office.
Act 360 mandates that hiring entities (parish governments) must issue press releases to local media outlets informing of the vacancy and make the notice available on official websites. Two separate notices with application information must be made at least a week apart in the governing authority’s official journal as well as a newspaper with a larger circulation within the parish if possible.
Proponents say evolving technology requires higher education and skills for government employees and that Act 36 will help shake the state’s historic reputation of patronage and incompetence.
Opponents argue that the job requirements “set the bar too high,” particularly in rural parishes which may have only one- or two-person registrar’s offices.
The amendment and associated legislation does not apply to any registrar already appointed.

Amendment 2
Tuition and fee autonomy to college management boards
A Vote For would let higher education boards set annual tuition rates and fee amounts for colleges and universities without legislative approval.
A Vote Against would preserve the state Legislature’s authority over tuition and fee levels.
Public higher education management boards had the authority to raise or lower tuition rates for schools in their systems until a 1995 constitutional amendment defined public college and university tuition as a “fee” imposed by state agencies and therefore subjected all rate changes to legislative scrutiny and consent.
In 2010, Gov. Bobby Jindal signor Diplomas Act — or LA GRAD Act — permitting annual tuition increases of up to 10 percent if certain criteria is met.
This amendment would allow the higher education management boards to set annual tuition and fee amounts without legislative approval.
To provide a sense of scale, the Legislative Fiscal Office estimated that a 1 percent increase in tuition would generate about $12 million in additional revenue for higher education. The actual increase would depend on how much each board increased tuition.
Tuition and fee increases would cost more for students and their parents while also providing additional funding for colleges and universities if enrollments do not fall steeply.
Proponents point out that Louisiana is one of just two states that do not allow colleges to make autonomous decisions regarding tuition and fee levels at their respective universities. It is the only state that requires a two-thirds vote of the Legislature to change tuition and fees.
Also, because the Legislature is often slow to act, public universities across the state are often unable to price themselves in a competitive manner or raise enough tuition revenue to deliver appropriate education services to their students.
Opponents argue that there is little evidence in recent years that the Legislature would not raise tuition when appropriate, noting that tuition has almost doubled since 2007.

Amendment 3
Eliminates federal income tax deduction for corporations on state tax returns and sets a flat rate
A Vote For would eliminate the deduction for federal income taxes paid by corporations when calculating state income taxes while triggering a flat corporate rate of 6.5 percent.
A Vote Against would allow corporations to continue receiving a state income tax deduction for federal income taxes paid and allow the existing corporate tax rates and brackets to remain.
Louisiana is one of only three states that allows businesses filing as corporations on their state income taxes to deduct the amount paid in federal income taxes from their state income during the same year.
According to the state Department of Revenue, this deduction collectively reduces the state tax liability of corporations in the state by about $200 million annually.
Current law provides for a tiered system of rates and brackets used to calculate corporate income tax owed to the state ranging from 4 percent on the first $25,000 of taxable income to 8 percent on any income above $200,000.
The constitutional amendment and companion legislation would made a trade-off: corporations would get a flat tax rate of 6.5 percent, but give up the federal tax deduction. The main purposes of the change would be to establish a lower top tax rate for corporations and to partially delink state tax calculations from the federal tax system.
Two laws passed during the 2016 First Extraordinary Session — Act 8 and Act 20 — would go into effect if this amendment is adopted.
Act 8 eliminates the graduated tax bracket system used to calculate the tax liability of corporations in favor of the flat 6.5 percent tax.
Act 30 would simply change the state tax code to comply with the new amendment.
Proponents say this amendment eliminates one of the biggest corporate income tax deductions while lowering the top rate, adding that, as one of just three states offering a full federal corporate income tax deduction, this would bring the state in line with standards observed around the country.
The state’s highest rate is 8 percent — higher than most other states, particularly in the southeast and central regions. Dropping the rate to 6.5 percent would make the state more competitive at a national level.
Opponents say no action should be taken to raise taxes on those corporations making relatively less income currently and thus being taxed at the 4, 5 and 6 percent levels. They say some of these businesses do not have the luxury of building up net operating losses to later claim against their taxes.
Also, the amendment serves no purpose in either increasing or decreasing state revenue in any substantial direction.

Amendment 4
Property tax exemption for surviving spouses of persons killed in the line of duty
A Vote For would give surviving spouses of military, fire protection officers and law enforcement personnel who died while on duty a full property tax exemption on their home.
A Vote Against leaves existing ad valorem property tax exemption levels and eligibility requirements in place.
The state constitution currently allows all citizens an exemption from most parish property taxes up to $75,000 of the value of the homestead if they reside in the home. It also allows most surviving spouses of deceased veterans with a service-connected disability rating of 100 percent unemployability or disability to receive a homestead exemption of $150,000 on their property taxes.
The constitution also prevents parishes and other taxing bodies from imposing additional taxes on surviving spouses to make up the losses from the exemptions.
The proposed amendment adds another exemption to the state constitution for a surviving spouse of a person who died while on active duty. It applies in cases of death by members of the U.S. armed forces or the Louisiana National Guard or while performing their duties as a state police, law enforcement or fire protection officer.
The spouse would receive a 100 percent exemption on the full assessed value of the home.
Widows or widowers are not able to retroactively receive the exemption — the benefit is only available beginning in the tax year the person died or 2017, whichever is later..
Proponents say the amendment is a good gesture of support towards widows and widowers with spouses that have paid the ultimate sacrifice to protect our community and country and that the impact on local taxing bodies would be minimal as the population of eligible recipients is small.
Opponents argue that, although this expansion of the homestead exemption is relatively minor, the combination of this and other special exemptions has a large impact on the local revenue base.

Amendment 5
Creates a Revenue Stabilization Trust Fund
A Vote For would create the Revenue Stabilization Trust Fund to receive a portion of revenues from corporate and mineral taxes and to spend the money on infrastructure and pension liabilities.
A Vote Against would continue to allow corporate tax and mineral revenue above a certain threshold to flow into the state general fund for appropriation by the Legislature.
The Budget Stabilization Fund, intended to provide lawmakers with a cushion in times of financial hardship, can be tapped when revenue forecasts fall below certain levels. However, the current Budget Stabilization Fund has an imposed cap of 4 percent of total state revenue (excluding disaster relief money from the federal government) in the previous fiscal year. When this cap is reached, revenue is no longer deposited into the fund but is redirected back into the general fund for discretionary spending.
In fiscal year 2016, the cap for the fund was set at $804.8 million and the current balance is $487.4 million.
The amendment would leave in place the Budget Stabilization Fund and create a new pot called the Revenue Stabilization Trust Fund, the purpose of which would be to smooth the volatility of corporate and mineral tax receipts from year to year and create a long-term asset for the state.
Proponents say the amendment will stop the practice of appropriating nearly every dollar the state receives every fiscal year by introducing forced fiscal restraint as it relates to the volatile revenue sources of corporate income tax and mineral revenue.
It will have the added benefit of recognizing that credit rating agencies assess the strength of Louisiana’s trust funds when calculating the state’s fiscal health and the reliability of the state to make good on its commitments.
Opponents argue that the proposal further ties the hands of elected legislators and reduces the flexibility needed to fund priorities appropriately.
Additionally, the lack of limitations on what might constitute an “emergency” and the two-thirds vote authorization to sweep money from the fund undermines the ability of this account to serve its state purpose.

Amendment 6
Adjusts threshold for tapping protected funds
A Vote For would provide legislators a new way to tap into constitutionally protected funds during revenue downturns and also extends protection to five existing funds.
A Vote Against would keep in place the existing trigger which allows the Legislature to tap into otherwise protected funds.
In times of severe financial stress and revenue shortfalls, the governor and lawmakers have the ability to tap some funds that typically are protected through statute or the state constitution provided certain criteria is met.
Currently, most constitutionally and statutorily dedicated funds are available to be tapped under this tripping mechanism, but certain funds remain protected even if the trigger standards are met — Bond Security and Redemption Fund, the Louisiana Education Quality Trust Fund, the Millennium Trust Fund, some unfunded accrued liabilities in the pension systems, the Medicaid Trust Fund for the Elderly and a variety of existing severance tax and royalty tax revenue dedications.
The proposed amendment would add a new trigger letting the Legislature use otherwise protected and dedicated funds. It adds five other funds to the list of accounts exempted from the present and proposed triggers. It also allows fund balances to be diverted.
Specifically, the amendment would allow the trigger to be pulled if the official revenue estimate for the next fiscal year falls 1 percent or more below the previous official revenue forecast for the next year.
This is significant because it means legislators can pull the trigger even if revenue is expected to increase in the coming years.
The new trigger is based simply of comparing a new estimate to the previous estimate for next year, not on whether revenues are actually declining.
The Legislature would be able to tap up to 5 percent of each fund’s current year budget allocation. But the amendment adds a new wrinkle: the Legislature also could take up to 1 percent of a constitutionally created fund’s existing balance.
About $167 million is estimated to be available to tap through 5 percent cuts to funds based on current year allocations. But another $53 million would be available by scraping 1 percent of existing constitutionally created fund balances.
Proponents say that, while it is important to have a trigger high enough to discourage legislators from using protected funds in every instance a budget deficit occurs, the existing trigger for handling ensuing year shortfalls is too high and was crafted in such a manner that it was never intended to be activated.
Because official forecasts for the current fiscal year and subsequent fiscal years are often revised up or down at the same time, obtaining a 1 percent drop in projected revenue between the two forecasts would be unusual.
Also, granting access to most constitutionally and statutorily protected funds during severe budget deficits would allow the Legislature to more equitably distribute necessary cuts across a variety of state programs and reserves.
Because many parts of the state budget have been locked up through laws or the state constitution, deep cuts must often be made to health care services, higher education and other parts of the discretionary budget.
Opponents say the amendment discourages the development and adoption of long-term and comprehensive budget reform because it allows legislators to rely on additional one-time money to paper over underlying systemic problems with the state’s recurring revenue streams and spending patterns.
Tapping into protected accounts is also a rejection of the primary concerns Louisiana voters have expressed through the adoption of previous constitutional amendments. By electing to shield some funds from the threat of discretionary cuts, constituents have voiced their support for various causes and initiatives and told lawmakers to look elsewhere to pug budget shortfalls.

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