Opinion ID: 1828536
Heading Depth: 1
Heading Rank: 8

Heading: Ceiling on State Ad Valorem Tax

Text: The City also assails the constitutionality of LSA-R.S. 11:1481, as amended by Act 860, on grounds that it allows the legislature to impose what amounts to a substitute for a state ad valorem tax and thereby evade the constitution's 5.75 mill ceiling on state ad valorem taxes without actually passing a tax. The district court rejected this challenge to the constitutionality of the statute, ruling that the statute does not impose an additional tax, and thus there is no violation or circumvention of the 5.75 mill ceiling. This district court's ruling in this regard is correct. Louisiana Constitution article VII, § 19 provides: State taxation on property for all purposes shall not exceed an annual rate of five and three-quarter mills on the dollar of assessed valuation. The City argues that LSA-R.S. 11:1481 violates this constitutional provision because it attempts to do indirectly, by taking a portion of the City's ad valorem tax revenues, what the legislature must do directly, i.e., enact a state ad valorem tax. The net result of this action, the City argues, is to allow the state to evade the constitution's 5.75 mill ceiling on such taxes. [11] The Fund responds to the City's argument by pointing out that LSA-R.S. 11:1481 is not an additional tax, but an internal funding mechanism that appropriates money from one governmental entity to another. In other words, the statute involves allocation and not taxation. Because the statute does not impose any additional tax burden on the citizens of Louisiana, the Fund argues that it cannot, by definition, violate the provisions of La. Const. art. VII, § 19. As noted previously, the legislature may enact any legislation that the constitution does not prohibit. Louisiana Municipal Association, 04-0227 at 45, 893 So.2d at 843. The fundamental flaw with the City's argument is that, notwithstanding the fact that the statute does not impose an additional tax, and thus does not implicate the constitutional provision imposing a 5.75 mill ceiling on state ad valorem taxes, the City fails to demonstrate, or offer any evidence to establish, that the amounts collected pursuant to LSA-R.S. 11:1481 exceed the 5.75 mill ceiling imposed by the constitution. As a result, even assuming the validity of its argument that the statute attempts to do indirectly what the state must do directly, i.e., enact a state ad valorem tax, the City's challenge to the constitutionality of LSA-R.S. 11:1481, as amended by Act 860, on grounds that it violates the ceiling on state ad valorem taxes imposed by La. Const. art. VII, § 19 is without merit.