Tax Law

State Net Capitol Journal – December 15, 2014; Inventory Tax Costing Louisiana Millions

Budget & Taxes

INVENTORY TAX COSTING LA MILLIONS: Every year Louisiana businesses pay hundreds of millions of dollars in inventory taxes to parish governments. The state then issues them a full refund.

The state's inventory tax refund program, approved by the Legislature more than two decades ago, created a $427 million hole in the budget last year. And that hole has been growing fast recently, with the cost of the program having shot up by 120 percent over the last several years, raising suspicions that businesses might be gaming the system.

Robert Travis Scott, president of the nonpartisan Public Affairs Research Council, said the problem is "huge and it's getting huger."

"And that really is the problem. Where's the lid on this thing?"

Scott expects the cost of the program to swell to $600 million in the next couple of years.

The state can't simply do away with the inventory tax, however, because local governments depend on the money. Industry-heavy St. James Parish, for example, derives nearly half of its property tax revenues and about 17 percent of its total tax collections from the inventory tax.

"These revenues are vital to operating a parish from the police jury down to the sheriff down to the libraries," said James Laurent Jr., assessor for Pointe Coupee Parish. (ADVOCATE [BATON ROUGE])

TX GOV-ELECT TAKING ON ROAD FUNDING SHORTFALL: Incoming Texas Gov. Greg Abbott (R) has set an ambitious goal for his first year in office: nearly eliminating his state Department Of Transportation's $5 billion annual budget deficit.

"I've outlined a detailed plan that will ensure that we add $4 billion more per year for building roads in this state without raising taxes, fees or tolls," he said at a press conference last week.

The state's voters have already given the governor a big hand in helping him reach his goal, approving Proposition 1, which will allow the state to divert some oil and gas production revenues to the highway fund. Abbott also wants to direct two-thirds of the sales taxes collected on vehicle sales into that road fund. (TEXAS TRIBUNE [AUSTIN])

SC NEEDS BILLIONS FOR TRANSPORTATION: South Carolina's Transportation Commission gave final approval this month to a plan projecting the state will have to spend another $70 billion on transportation — about $60 billion of it on roads — over the next 25 years. The problem with the Statewide Multimodal Transportation Plan is that the state is only expected to have $28 billion available to spend on transportation over that period, meaning it will be about $1.5 billion short of meeting its transportation needs every year. Gov. Nikki Haley (R) intends to release her plan for funding transportation next month, but her office has said it won't include any tax increases (STATE [COLUMBIA], STATE NET).

BUDGETS IN BRIEF: KANSAS' three state-owned casinos contributed $673 million to the state's economy and provided about 4,000 jobs in 2013, according to a study commissioned by the American Gaming Association (WICHITA EAGLE). • UTAH Gov. Gary Herbert (R) has released budget projections showing the state has a $638 million surplus, due mostly to increased income tax collections (SALT LAKE TRIBUNE, STATE NET). • Also in UTAH, legislators are considering major increases in fuel taxes, sales taxes and vehicle registration fees to cover an estimated $11 billion shortfall in the state's unified transportation plan through 2040 (SALT LAKE TRIBUNE).

- Compiled by KOREY CLARK

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