Two Carters and a property tax

The 2019 Louisiana Legislative Session begins on Monday, April 8, and amidst discussions about gas taxes, insurance rates, teacher pay, and the budget, however, two constitutional amendments under consideration could empower Orleans Parish to both lower property taxes on renters as well as those paid by poorer homeowners threatened with losing their houses thanks to higher assessments – and the corresponding larger taxes resulting from them.

If both bills are passed, these two proposals could both make Orleans Parish more competitive for small business, as well as more friendly to a working class who seeks more affordable housing and homeownership within the City of New Orleans.

Senate Bills 79 and 80 filed by Troy Carter (D-Algiers) stands as an Orleans-specific measure which would allow the City Council to lower or exempt property taxes on low to moderate homeowners earning no more than 120 percent of the area’s median income. In 2018, that would have been a family of four with income up to $78,720.

Right now, the LA State constitution prevents such local exemptions, so Mayor LaToya Cantrell (and her successor in the rapidly gentrifying District “B” seat) Councilman Jay Banks asked for this New Orleans-specific bill to be filed to protect homeowners in areas like Central City, Saint Roch, Gentilly, and the Bywater where rising property values are literally forcing those who own their homes outright (often African Americans) to have some measure of defense when the tax bill begins to rival the one-time value of the home.

Meanwhile, in a slight apostasy to some Republicans, but with heavy support from the business community, Rep. Steve Carter (R-BR) filed House Bill 12, which (if approved) would ask voters in the Autumn to amend the Constitution to allow parish governing authorities to alter the amount of the Homestead Exemption in their jurisdiction. The respective parish electorates will not be able to vote to increase the exemption above $75,000, yet they will be able to approve a lower threshold, say $50,000 (or Texas’ homestead exemption of $25,000). Correspondingly, millages – the percentage rates per $1,000 of property value used to calculate local property taxes – would likewise have to be reduced to ensure no increase in revenue under the legislation.

The Homestead Exemption has stood as a politically untouchable shibboleth since enacted in 1934, yet while Steve Carter’s law as written would expose more homeowners to higher property taxes, most commercial property owners would see their overall taxes decrease because of lower millages. This includes the owners of apartment buildings. Rolling back property tax rates could help lower rising rents, or at least arrest the rate of their increase, in other words – a particular point of importance in the city where half the population rents rather than owns.

In New Orleans, where there are virtually no homes valued under $75,000, most homeowners pay property taxes. Still, even a change of $25,000 in the exemption could roll back the millage rate as much as 20 percent, making Orleans more competitive with nearby Jefferson. Nevertheless, Steve Carter’s proposal may encounter serious opposition from rural and poor parishes like Tensas, St. Helena, Madison and East Carroll where a $75,000 homestead exemption means vast swaths of their private residences do not incur much or any property tax at all.

Yet, worth noting is that the average household income in those parishes is under $30,000 per year according to the U.S. Census. In Ascension, Jefferson or St. Tammany, median household incomes are near or above $60,000, closer to Orleans, and likewise home values mostly cross the $75,000 threshold.

The truth is that the Homestead Exemption no longer protects working class voters in urban-suburban parishes from property taxes. In part because of the exemption, the overall millage rate can end up so high that many struggling homeowners in up-and-coming neighborhoods struggle to continue to hold on to their homes. With property values climbing so drastically – particularly in Orleans Parish – even a drastic increase in the homestead exemption would not outpace the impact of an upwardly-spiraling property tax bill on poorer homeowners. Moreover, simply raising the value of the exemption above $75,000 would force millage rates to roll forward to rates that would not only impact Louisiana’s small business competitiveness, but would also drive up already rising apartment rents on the poor. If affordable housing is rare now, watch what would happen if the millage rate increased by 30 percent.

The solution for Orleans Parish would be for the legislature to enact both measures of both Carters, which would give the council power to both lower the millage rate by broadening the property tax and – at the same time – protect the neediest working class homeowners to even greater degree than the Homestead Exemption can presently.

As Mayor Cantrell admits the city wants to aim at least some of the exemptions at first-time homeowners who are purchasing homes with loans backed by the Federal Housing Administration – typically people with lower incomes – this could even help young people buying homes which they are currently priced out of in Orleans Parish. Our Editorial Board wishes Troy Carter would amend his legislation to give EVERY parish these tools to protect the working class, just as Steve Carter wishes to so empower parishes across the state to lower the overall millage rate. We hope the Senate Revenue and Fiscal Affairs Committee will agree when Troy Carter presents his legislation in the coming days.

Together, the bills of the two Carters could broaden the tax base, lower tax rates, and still protect homeowners holding on by a thread to a greater extent than now. And since both measures give parish government the choice to do so, and not the mandate, parishes where such reforms do not fit – or remain politically unfeasible – need only to do nothing to maintain the status quo.

Should two-thirds of the House and Senate pass the measures, the constitutional amendments would go before the voters on October 12.

This article originally published in the April 8, 2019 print edition of The Louisiana Weekly newspaper.