Louisiana Constitution, Article VII: Significant Developments

Louisiana Law Review Volume 62 | Number 1 Fall 2001 Louisiana Constitution, Article VII: Significant Developments David Conroy Repository Citation David Conroy, Louisiana Constitution, Article VII: Significant Developments, 62 La. L. Rev. (2001) Available at: https://digitalcommons.law.lsu.edu/lalrev/vol62/iss1/11 This Article is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted for inclusion in Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact . Louisiana Constitution, Article VII: Significant Developments David Conroy* Article VII of the Louisiana Constitution addresses state and local revenue and finance. It initially comprised about one-sixth of the entire constitution. Now, after more than fifty amendments, it encompasses approximately one-third. The initial provisions of Article VII clearly reflected a desire of the delegates to the 1973 Constitutional Convention and of the people who approved the constitution that there should be specific limits on the powers of the state government to tax and spend. Subsequent amendments to Article VII have reinforced that basic distrust, particularly by restricting the legislature's power to use specific revenue sources. The result, Louisiana's current constitution, is a complex document that will increasingly require amendment because its restraints on government have become more detailed.' This article will highlight some of the more significant developments concerning Article VII since its adoption. Even the broad initial statement of Article VII-the power of taxation is vested in the legislature-was modified in 1998 expressly to provide that the power to tax may not be exercised by the courts.' The requirement of a two-thirds vote of the legislature 4 to increase taxes 3 was extended to include fees in 1995. A 1991 amendment mandated that there be a single sales tax collector in each parish.5 Article VII originally prohibited any political subdivision from imposing a motor vehicle license fee, 6 a tax on motor fuel, 7 and an income tax.' The prohibition was expanded to include the inheritance tax in 1990.' The courts Copyright 2001, by LOUISIANA LAW REVIEW. David Conroy is a partner at the law firm of Milling Benson Woodward, L.L.P. and was an elected delegate to the 1973 Constitutional Convention. 1. It would unreasonably burden this publication to reproduce the fifty pages of text that now comprise Article VII. In any event, for an excellent detailed examination ofArticle VII, see Lee Hargrave, The Louisiana State Constitution-A Reference Guide 115 (1991). See also David Conroy, Louisiana Constitution of 1974: Taxation, 21 Loy. L. Rev. 97 (1975). 2. 1997 La. Acts No. 1493 (amending La. Const. art. VII, § 1). 3. La. Const. art. VII, § 2. 4. 1995 La. Acts No. 1324 (adding La. Const. art. VII, § 2.1). 5. 1991 La. Acts No. 1072 (adding La. Const. art. VII, § 3(B)). 6. La. Const. art. VII, § 5. 7. La. Const. art. VII, § 4. 8. Id. 9. 1990 La. Acts No. 1100 (amending La. Const. art. VII, § 4(c)). * LOUISIANA LA W REVIEW [Vol. 62 subsequently interpreted the prohibition against income tax to include a prohibition of a tax on earnings. 10 The three dollar annual automobile license tag fee, regarded as sacrosanct by the 1973 Constitutional Convention, was replaced in 1989 by a one dollar fee for each $1,000 of actual value (with a ten dollar minimum)." Efforts to ease the constitutional restrictions on the state income tax-limiting the tax to the rates that existed in 1973 and deduction of federal income taxes- have requiring an allowance of 2 failed twice with voters.' A series of amendments significantly tightened the budget process. They limited bonded indebtedness, 13 constrained increases in expenditures, 4 clarified balanced budget requirements, 5 mandated current elimination of a previous year deficit,' 6 and required immediate action to eliminate projected current year deficit. 7 These amendments also restricted the use of non-recurring revenues in the operating budget,' 8 placed the revenue estimating conference in the constitution to insure the effectiveness of this prohibition and the reliability of revenue projections, 19 and required feasibility studies for capital improvements.2" The legislature has also shown that innovative means can keep the state running under desperate circumstances. Despite then existing restraints on debt financing, revenue anticipation notes were held not to be'debt.21 The legislature also circumvented taxing restrictions when it created a statewide special district 22and allowed the special district to issue bonds and impose a sales tax. 10. City of New Orleans v. Scramuzza, 507 So. 2d 215 (La. 1987). It is not clear whether a value added tax that gives no deductions for wages paid and thus effectively taxes wages would similarly be regarded as an income tax. 11. 1989 La. Acts No. 28 (amending La. Const. art. VII, § 5). 12. 1989 La. Acts, 1st Ex. Sess., No. 1; 2000 La. Acts No. 48; see Thomas H. Ferrell, 1 Louisiana Voters Reject Tax Reform Amendment, State Const. Commentaries and Notes 27 (1989); Thomas H. Ferrell, 3 The Louisiana Constitutional Convention of 1992, State Const. Commentaries and Notes 9 (1992). 13. 1993 La. Acts Nos. 1043, 1044 (amending La. Const. art. VII to add § 6(B)(2) and § 6(F)). 14. 1990 La. Acts No. 1096; 1993 La. Acts No. 1045. 15. 1990 La. Acts No. 1096. 16. Id. 17. Id. 18. 1993 La. ActsNo. 1042; 1997 La. ActsNo. 1501 (amending La. Const. art. VII, § 10). 19. 1990 La. Acts No. 1096; 1993 La. Acts. No. 1042. 20. 1993 La. Acts No. 1045. 21. State Bond Comm'n v. All Taxpayers, 510 So. 2d 662 (La. 1987); State Bond Comm'n v. All Taxpayers, 525 So. 2d 521 (La. 1988). See also Lee Hargrave, Limits on Borrowing and Donations in the Louisiana Constitution of 1975, 61 La. L. Rev. 137 (2001). 22. Board of Dirs. of the La. Recovery Dist. vs. All Taxpayers, Prop. Owners, 2001] DAVID CONROY Article VII, Section 9 requires that all state money be deposited in the state treasury and credited to the Bond Security and Redemption Fund. In each fiscal year, an amount from this fund must first be allocated to pay all of the obligations secured by the full faith and credit of the state. Initially, there were no other constitutionally dedicated funds besides the Bond Security and Redemption Fund. Now, there are many more-the Louisiana Wildlife and Fisheries Fund,23 the Louisiana Education Quality Trust Fund,24 the Wetlands Conservation and Restoration Fund,25 the Revenue Stabilization/Mineral Trust Fund,26 the Higher Education Louisiana Partnership Fund," the Mineral Revenue Audit and Settlement Fund,28 the Oilfield Site Restoration Fund,29 the Oil Spill 32 Contingency Fund,30 the Millennium Trust,3 the Louisiana Fund, 33 34 the Millennium Leverage Fund, the Transportation Trust Fund, the First Use Tax Trust Fund, 35 the Louisiana I (...truncated)