Asked what the biggest challenge three area school superintendents faced in the coming months, St. Charles Parish Superintendent Felecia Gomez-Walker unhesitatingly replied making sure they were all aggressively involved in the legislative process.
Gomez-Walker said St. Charles Parish school system has been working collectively with the Sheriff’s Office, parish government and other school superintendents to oppose eliminating the inventory tax credit, which Gov. Bobby Jindall has targeted to deal with a projected $1.6 billion budget shortfall.
“We risk losing about $16 million a year with elimination of inventory taxes,” Gomez-Walker said at the River Region Chamber of Commerce education roundtable held Thursday at Belle Terre Country Club in Laplace. “This is a very serious concern for all of us and we’ll be very aggressive in fighting this.”
For St. John Parish, Superintendent Kevin George put the projected loss at $6.8 million and Lonnie Luce, superintendent of St. James Parish schools, said his system would lose $9.8 million.
Without revenue to cover debt, we have to raise millage taxes,” George said.
Despite being prudent with tax dollars, there would be no other choice but to seek new revenue sources, he said, and particularly so with “funding losses at a tough rate with this governor.”
Gomez-Walker agreed.
“The state, with budgeting, is very serious and we’re watching very closely where the money is going,” she said. “We see public school dollars being redirected to private schools and we’re very concerned about that.”
Herald-Guide political columnist Jeremy Alford includes the governor’s move to repeal the inventory tax credit among what he calls “indirect tax increases.” The Louisiana Association of Business and Industry (LABI) agrees, warning loss of the tax credit along with proposed fee hikes, has put its business lobby on the defensive this legislative session.
Jim Melohn, St. Charles Parish schools’ chief financial officer and legislative liaison, said “The inventory tax is vital to all school systems in Louisiana accounting for about $170 million dollars annually to school systems. While it is important to all school systems, it is critical to the St. Charles Parish School Board.”
Melohn said the inventory tax makes up more than 22 percent of the property tax base in the parish, which equates to just under $16 million dollars annually.
In the system’s general fund alone it represents 10.3 percent of the revenue from all sources,” he said. “That is the equivalent of 185 teaching positions.”
While Luce said he doesn’t want to squabble over dollars for K-12 versus higher education, they do have to continually fight over those dollars on the state level or face having to raise revenue. The inventory tax is important to the school system, he said, but also to the Sheriff’s Office and parish government.
State Sen. Troy Brown, D-2, also told the group that the inventory tax will be a high issue for the river parishes, projecting they will lose “nine figures” if the credit is lost.
As of now, the tax credit has been bundled with several others targeted for a cut, but Brown said he would not support the move.Jindal’s plan calls for rolling back 12 refundable tax credits in his budget draft submitted to a Louisiana legislative committee this month to address the state’s budget shortfall.
Eliminating the credits could also shift the tax revenue from the local level to higher education and health care services, which also are contending with large funding cuts.
Nearly three-fourths of the savings would come from eliminating the tax credit, which for the past two decades has provided a refund for inventory taxes, which is a property tax paid by businesses of all sizes to local governments.
Local government assesses the inventory of a business. The business then submits a bill to the state and it refunds that amount.In March, St. Charles Parish Assessor Tab Troxler said, “It’s the snowball stand, they’re paying inventory tax on their syrup.”
Troxler said the industrial sector foots the bulk of the bill with the inventory tax in the form of inventories on oil, gas and petrochemicals. The state’s proposed move to scale back the tax credit from the inventory tax would represent nearly $500 million a year.
He equated the move to shifting the fiscal crisis from the state to the parish.Businesses also would consider losing the credit to a tax hike at the parish level.
Companies would pay the inventory tax to local governments, but the revenue wouldn’t flow back from the state as it does now. Jindal’s proposal is expected to especially hit automobile dealers and the chemical industry.Dan Borne, president of the Louisiana Chemical Association, said chemical plant suppliers, of which there are several hundred in Louisiana, could relocate their storage facilities out of the state.
Louisiana is among a handful of states with an inventory tax and about half of them offer a full refund similar to the one Jindal proposed repealing. State legislators have said they would rather eliminate the tax rather than adjust it with a tax credit, which could generate an estimated $452 million for the state.
The state has tried unsuccessfully to kill the inventory tax since it was implemented in the late 1900s, but parishes have grown dependent on the revenue. The tax credit resulted from efforts to kill the tax in the 1990s.But, at the education roundtable, area superintendents say the tax burden may ultimately shift to homeowners in property tax hikes if the tax credit is lost.
For St. Charles Parish, the assessor’s office said the 2013 amount was $31 million and 2014 was $32 million in revenue from the credit, which Troxler said represented about 22 percent of the parish’s revenue.
In neighboring St. John Parish, the parish received $21.5 million in 2012 and $22.4 million in 2014.Henry Friloux of the River Region Chamber of Commerce said losing the credit would hurt efforts to expand industry and grow it because they use the tax credit as a bargaining chip to draw new industry.The Port of South Louisiana does advertise the inventory tax credit as a bonus for businesses considering coming to the state.
Its website states: “The River Region offers a comprehensive and competitive package of business incentives for new and existing businesses. Both the state of Louisiana and the parishes of St. Charles, St. John, and St. James have dedicated funds available for major infrastructure and capital purchases for companies considering locating to the River Region.”
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