Downs Gives Sneak Preview of Road Funding Needs

Next month we'll be hearing a lot about exactly how big Louisiana's transportation funding shortfall is. But House Transportation Committee Vice-Chairman Hollis Downs (R) gave a sneak preview yesterday.

Louisiana needs $750 million per year in new revenue to address road and bridge needs, the vice-chairman of the House Transportation Committee said Monday.

To put this in context, Louisiana raises a bit less than this annually from its entire gasoline tax right now. So if the money were all coming from own-source gas tax revenues, Louisiana would have to more than double its gas tax to meet its needs.

Of course, the state's transportation funding doesn't really work that way. The feds kick in a fair amount, and state vehicle fees, tolls and general fund revenue fill in the gaps. But the size of the annual gap still should give pause to any Louisiana lawmakers who think they've got a budget surplus.

Is It Possible for Property Taxes to Be Too Low?

In Louisiana, the answer is probably "yes."
An excellent editorial in the Daily Advocate notes that the ten lowest-property-tax counties in America in 2006-2008 (for residential property) were all in Louisiana. The main reason for this is pretty straightforward: every owner-occupied home in Louisiana receives an exemption for the first $75,000 of home value. In practice, this amount covers something close to half of all properties in the state.
The topic is being raised right now because there are active proposals to increase the homestead exemption. As the Advocate editorial correctly notes, the impact of this would be a

shift of tax burdens directly onto owners of business and commercial property. It also would shift more of the property tax burden onto renters, rather than homeowners; renters pay property taxes through their monthly checks to landlords, without benefit of a homestead exemption.

This isn't an argument that Louisiana's homestead exemption actually needs to be reduced. But it certainly makes a good case that further increases ought to be the last thing on state policymakers' minds at this time.