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Property tax reforms are in danger

By Dan Juneau -   Apr 03, 2008

After much anticipation, Governor Jindal’s Tax Commission was sworn into office on March 18, 2008.

Within minutes of taking their oath of office, the new commission unanimously voted to overturn significant, pro-taxpayer rules put in place by the prior Tax Commission under Governor Blanco.  Because of this reversal in policy, many taxpayers will be subjected to higher property assessed values and higher taxes.

During the summer of 2007, the Blanco Tax Commission heard testimony, discussion and lengthy presentations from taxpayers and assessors on the pending rules and regulations for 2008. Taxpayers successfully argued that, to achieve fair market value in valuation techniques as mandated by our state constitution, the appraiser must appropriately recognize depreciation and obsolescence when evident, or the property will be overvalued—and thus, overtaxed. To the contrary, the assessors pushed for discretionary privileges regarding obsolescence, leaving its inclusion solely at the discretion of the assessor. Unfortunately, many assessors simply do not recognize obsolescence as a matter of practice, even though it is a requirement of the appraisal process in determining fair market value.  Other assessors treat obsolescence as a gift to taxpayers—if they choose to bestow it.

Taxpayers are not looking for gifts or handouts, but rather the uniform application of appraisal principles throughout the state, regardless of whether the parish is an “obsolescence-granting” parish or whether the “obsolescence-granting” assessor is still in office or not.  This arbitrary and capricious treatment of obsolescence certainly does not comply with the uniformity provisions of our state constitution—property should have the same fair market value standards statewide, irrespective of the parish or assessor making the fair market value determination.

During much of modern history in Louisiana, assessors have generally had their way with the Tax Commission.  This has often led to the historical under-assessment of residential property on the tax rolls statewide and a disproportionate amount of property taxes being paid by business and commercial interests.  Gov. Blanco made a bold decision early in her administration to reform and clean up the property tax system. To do this, she appointed a fair and independent Tax Commission. This obviously worked, because both taxpayers and assessors generally left Tax Commission meetings not satisfied, with neither ever getting all that they had hoped for.

Some powerful assessors were determined to overturn the reforms put in place under Governor Blanco. They endorsed then-candidate Jindal, in hopes of going back to the way things used to be at the Tax Commission.  On February 29, 2008, Governor Jindal announced his five appointments to the commission. On the same day they took their oath of office, the new commission, on rehearing and without any public discussion or explanation, reversed the obsolescence policy in favor of the assessors. Because of this change in policy, assessors will now be able, within the sole discretion and whim of each assessor, to choose whether or not to include obsolescence in their appraisals, even if established by the taxpayer.

While it is still too early to tell whether the Jindal Tax Commission will continue to veer from the road to reform paved by the Blanco Commission, it is definitely off to an inauspicious start. If the new policy holds, we will be telling businesses looking to invest or expand in Louisiana that they will need to kiss the rings of their local assessors in order to be treated fairly. That policy will erode the positive impact of the economic development advances Governor Jindal recently pushed through the Legislature. He should realize that and demand that his Tax Commission reverse this policy.

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