Wednesday, 02 March 2016 11:32

Amid Louisiana legislature budget crises, BGR's look at non-profit exemptions

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bgrSince Louisiana needs to live within its means, a good-goverment organization, the Bureau of Government Research,, (BGR) has issued a report on the fiscal impact of Non-profit exemptions. 

In a report, "It’s Time for Common Sense on Nonprofit Exemptions", BGR tackles the issue, generally, by makinng the following points:

The Exemptions are too broad, are not tied to specific public benefits,  and there is no use requirement.

The report starts by stating:

With the Louisiana Legislature facing an extraordi-nary fiscal crisis, an important dialogue has opened
regarding state revenue sources, tax dedications and priorities. But some measures proposed to close the
state’s fiscal gap could have a negative impact on local government revenues. The Legislature will
therefore need to consider ways to offset the fiscal impacts on local governments, which face their own
budgetary challenges.

In November 2015, BGR issued a report exploring the array of tax dedications in New Orleans, with revenues totaling more than $1 billion for various lo-cal purposes. The report found that only one-fourthof local tax revenue is available for broad munici-pal purposes. The other three-fourths is dedicated 

to specific municipal purposes or to other entities. These sizeable dedications limit the City’s ability to
meet basic responsibilities and pressing needs. The report concluded that it is time to identify taxes that
are ripe for redeployment to meet basic needs.  BGR’s report told an important part of the story on
the city’s finances. But it did not explore the hun-dreds of millions of dollars in tax revenues that are
never collected – dollars that for one reason or an-other have been exempt from taxation. Chief among
these exemptions are those granted to nonprofit or-ganizations under the Louisiana Constitution.1
In 1996 and 2011, BGR published reports explor-ing the cost of these exemptions. In the 1996 report,
BGR found that a staggering two-thirds of New Orleans’ real property value was off the tax roll. This
is due primarily to government and nonprofit ad valorem property tax exemptions, with the homestead
exemption accounting for a significant portion as well. In 2011, BGR estimated that 60% of property
value was off the tax roll, and local taxing bodies had to forego more than $125 million in revenue due to
nonprofit exemptions alone. 

Here is the report

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