CABLRecommendationson2015ConstitutionalAmendments

October13,2015

ThisyeartherearefourconstitutionalamendmentsontheOctober24thballot,farfewerthanthe14
thatvotershadtodecideonlastyear.FromCABLsperspective,therearetwothatarehighly
substantive,andbothdealwithtransportation.Therearetwoothersthat,atleasttosomedegree,
involveclarificationsabouttheintentoftheconstitution.

Andinterestingly,twoamendmentsmightlookfamiliartovoterswhocastballotslastyear.Oneis
verysimilartoanamendmentthatvotersrejected,butsomechangesthathaveoccurredsincethen
maymakethecurrentversionmorepalatable.Theotheronemakessomelanguagechangestothe
partoftheconstitutionthatdefinesfiscallegislativesessions.Thesearenewchangestothat
sectionrightontheheelsofchangesthatvotersapprovedlastyear.

Intheory,theconstitutionshouldbeaframeworkforgovernancewhichtheLegislaturefollowsin
enactingstatutes.Butovertheyears,ourconstitutionhasgrowntoincludefartoomanyprovisions
thatrestricttheLegislaturefromdoingitsjob.Partofthis,weacknowledge,stemsfromalackof
trustandafearthatrevenuesthatweregeneratedforoneintentwillbedivertedforusetoward
another.Oneamendmentthisyearmightbeseenasanexampleofthat.

Butmercifully,despitethefactthatmorethan60amendmentswereintroducedinthe2015
legislativesession,onlythesefourwillbeontheballotonOctober24.Withsomanyotherimportant
decisionstobemadeinracesforgovernor,otherstatewideoffice,theLegislatureandBESE,voters
deservedthisbreakfromthelonglistofamendmentstheyhavegrownaccustomedtoseeingover
theyears.

Amendment#1RestructureRainyDayFundandCreateNewFundforTransportation

Amendment#1isessentiallydesignedtohelpdirectadditionalresourcestothestateshuge
infrastructureneeds.Itdoesnotraiseanynewtaxes,butitdoesmakechangesinthestatesBudget
StabilizationFund,morecommonlyknownastheRainyDayFund,toredirectsomerevenuesto
transportation.

Theamendmentitselfissomewhatcomplicated,buttheconceptisfairlysimple.Thestatecurrently
hasaBudgetStabilizationFundwhichactssomethinglikeasavingsaccountwithacaponit.Its
designedtohelpthestateweatherbudgetdownturnssuchastheoneswehadstartingin2009.
Thereareanumberofwaysthestatecandepositmoneyinthefund,butoneoftheprimarysources
isexcessmineralrevenues.


Eachyearwegethundredsofmillionsofdollarsinoilandgasrevenueandsomeyearssignificantly
morethanthat.Statelawsaysgenerallythatwhenthosemineralrevenuesinanygivenyearexceed
$950milliontheexcessdollarsmustbedepositedintotheBudgetStabilizationFund.Thatfundhasa
caponit,however,andwhendepositsinitreachfourpercentofallstaterevenuereceivedduring
thepriorfiscalyear,itisconsideredfullandanyadditionaldollarsflowbackintothestategeneral
fund.

Amendment#1changesthissignificantly.Ifpassed,itessentiallydoesthreethings:

1. ItchangesthenameoftheBudgetStabilizationFundtotheBudgetandTransportation
StabilizationTrust.Withinthatitcreatestwosubfunds:theBudgetStabilizationSubfund,
whichismuchlikethecurrentRainyDayFund,andtheTransportationStabilizationSubfund,
whichisbrandnew.

2. Italsochangesthecapamountfortherainydayportionofthesubfundfromfourpercentof
staterevenuereceiptsto$500million.ThatamountstoareductionoftheRainyDayFunds
dollarcapbecausefourpercentofstaterevenuereceiptsforthecurrentyearwouldbe
about$811million.

3. Whentherainydaysubfundreachesits$500millioncap,excessmineralrevenueswould
thenbegintoflowintotheTransportationStabilizationSubfundforuseoninfrastructure
projects.It,too,iscappedat$500million.

Soinsimplestterms,thisamendmentbasicallylowersthecapontheamountofoilandgasrevenues
thatcangointoourRainyDayFundandredirectsdollarsthatwouldhavebeengoingthereintothe
transportationfundforhighwaysandotherinfrastructure.

Comment:Louisianaclearlyhashugeinfrastructureneeds.Wehaveneglectedthemaintenanceon
ourroadsandbridgesformanyyearsandwehavereachedthepointwherethebacklogisinthe
neighborhoodof$12billion.Andthathasnothingtodowiththenewprojectsweneedtoundertake
torelievecongestioninfastgrowingareasandextendI49northandsouth.Unquestionably,the
timehascometobegintoreinvestinourhighwaysandbridgesandthisamendmentrepresentsan
efforttodojustthat.

However,wedohaveconcernsaboutit,primarilybecauseoftheimpactithasonourRainyDay
Fund.Toaddalittlecontext,budgetexpertsacrossthecountrygenerallyagreethatstatesshould
haverainydayfundsandtheyshouldkeepthemfilledatalevelofaroundfivetotenpercentofstate
revenues.Ourcurrentcapisfourpercent,whichisonthelowendofwhatisrecommended.

Ifthisamendmentpassesandthecapischangedto$500million,thatwouldreduceourmaximum
rainydayreservestoabout2.5percentandthatpercentagewouldcontinuetodiminisheveryyear
asstaterevenuesgrow.

RainydayfundsareparticularlyimportantinstateslikeLouisianawheresignificantamountsof
revenuecomefromvolatilesourcesinourcase,oilandgas.Theideaisthatwhenthatrevenue

sourcesurgesexcessdollarsaredirectedtothefundandtheyaresavedtohelpthestateweather
thetimeswhenthereversehappensandrevenuesplunge.

Obviously,thefewerthedollarsinthefund,thelesshelpfulthefundcanbeduringafinancial
downturn.Forinstance,ourlawsaysnomorethanonethirdoftherevenuesinthefundcanbeused
inanygivenyeartohelpbalancethebudget.Ifourfundwasfullandwehad$811millioninitas
recommended,thatwouldmeanthatabout$267millionwouldbeavailabletomitigatesevere
budgetcutsifthemechanismtousethefundistriggered.Ifthefundiscappedat$500million,that
wouldsignificantlylowerthedollarsavailabletoonlyabout$165million.And,keepmind,thecuts
wearetryingtomitigatearetypicallydirectedtowardhighereducationandhealthcare.

CABLstronglybelievesweneedtoinvestmoreinourinfrastructureandwouldsupportavarietyof
approachestodothat.AtleasttwobillspassedbytheLegislaturethisyearandanother
constitutionalamendmentonthisfallsballotareproactiveattemptstoaddressourhighwayneeds.
Theyrenotthecompletesolution,byanymeans,buttheydomoveinthatdirection.

Thisamendmentisalsowellintended,butinthiscasewearewaryofthenotionoffurtherreducing
thepotentialrevenuesinourrainydayfundandthefuturerisksthatwouldimposetohigher
educationandhealthcare.Weneedabalancedapproachtoallofourbudgetissuesandfeelthis
amendmenttipsthatbalancealittlefurtherthanweshouldprudentlygo.OPPOSE

Amendment#2AllowtheStatetoInvestinLouisianaInfrastructureBank

Thisisanotheramendmentdesignedtohelpmeetsomeofthestatesinfrastructureneedswitha
particularfocusonlocalroadprojects.Duringtherecentlegislativesession,lawmakerscreated
somethingcalledtheLouisianaTransportationInfrastructureBank.Itssimilartoanapproachusedin
morethan30stateswherethebankisallowedtolendmoneytolocalgovernmentsatlower
interestratestofundlocaltransportationprojects.

Itsarevolvingfundsothatthemoneythatisborrowedfromthefundispaidbackovertimeandcan
beusedlatertolendtootherprojects.Theproblemisthatwhilethenewbanktechnicallyexists,it
hasnomoneytolend.ThisamendmentgivesthestateTreasurertheoptiontoinveststatefundsin
thebanktohelpcapitalizeit,asoneofanynumberofotherpossiblerevenuesources.

Comment:Thisissimilartoanamendmentthatwasdefeatedbyvotersonlastyearsballot.But
theresonehugedifference.Lastyear,theLegislaturehadnotyetcreatedtheinfrastructurebank
andvotersappearedwaryofpassinganamendmenttohelpfundabankthatdidntyetexist.Itdoes
now.Infrastructurebankshaveworkedsuccessfullyinotherstatestohelpfundroadprojectsandits
anoptionworthtryinginLouisiana.

Theamendmentisnecessarybecausetheconstitutiongenerallyrestrictsloaning,pledgingor
donatingstatepropertyorrevenuestootherentities.Thereare,however,anumberofexceptionsto
thatprohibitionandthiswouldbeanotherone.Thereisnorequirementthatstatedollarsbe
investedintheinfrastructurebankandiftheyare,theuseofthosedollarstohelpfundlocalhighway
projectsisclearlyservingapublicpurpose.

Currently,oneofthetreasurerschiefresponsibilitiesistomakejudgmentsregardingallkindsof
investmentsofstatedollars.Heorsheshouldhavetheoptionofconsideringthiskindofinvestment,
too,ifitappearstomakegoodsenseforthestate.SUPPORT

Amendment#3ClarifySubjectMatterRegardingFiscalLegislativeSessions

Louisianabasicallyhastwokindsofregularlegislativesessions:1)ageneralsessionwhichtakesplace
inevennumberedyears,and2)afiscalsessionwhichtakesplaceinoddnumberedyears.Ina
generalsessionabillcanbasicallybeintroducedonanysubjectmatterexceptmostissuesdealing
withraisingtaxesorfees.Thefiscalsessionisprettymuchtheopposite.Lawmakerscanintroduce
onlyfivebillsapiecedealingwithgeneralsubjectmatters,otherwisetheyarerestrictedtodealing
withmattersofthebudget,raisingtaxesorfees,dedicationofrevenues,etc.Inotherwords,mostly
fiscalmatters.

Butovertheyears,asissuesandterminologieshavechanged,theconstitutionallanguagerestricting
legislationinfiscalsessionshassometimesgrowntoorestrictiveitself.Forinstance,lawmakerscould
bedealingwithapackageofchangesinoneareaofthelawdealingwithtaxation,onlytofindthat
thatacertainitemthatclearlyfitsintothatdiscussionisnotexplicitlymentionedasoneofthe
subjectmattersallowedinafiscalsession.

Thisamendmentgenerallyremovessomeofthemorespecificandrestrictivelanguagedealingwith
taxationandtaxdedicationsandreplacesitwithbroaderwordingthatallowslawmakerstolegislate
withregardtotaxesanddedications.Thislanguageismoreappropriatefortheconstitution.Italso
identifiesrebatesasoneoftheallowablesubjectmattersforafiscalsession,asitshouldbe.

Comment:Thisamendmentisbasicallyclarifyinglanguagewhichisneededtomakeupforthe
confusioncausedbysomeoftheexistinglanguageintheconstitutiondealingwiththevariousfiscal
issuesthatcanbedebatedduringafiscalsession.Yes,ifyoucountthefivegeneralsubjectmatter
billslawmakerscanintroduceinafiscalsession,onecouldarguetheresnoneedforthisamendment
because,inessence,byusingsomeofthemanyissuecanactuallybedebated.Thatstrue.

Butlawmakersoftenusethosefivegeneralbillstotakecareofotherneedsandtheresnoreasonto
evenhavetheeveryotheryearfiscalsessionsifthefiscalmattersthatcaneasilybedebatedinthem
areinadvertentlyleftoffthetable.Thatwasnevertheintent.Thisisyetanotherofthosecases
wherewehaveputsomuchspecificityintothelanguageintheconstitutionthatwehaveto
repeatedlycomebackandfixit.Thisisanotheroneofthosefixes.

Giventhat,perhapsitstimetoconsiderwhetherthepolicyoftwodifferentkindsoflegislative
sessionshasworkedoutthewayitwasintended,orifanotherapproachwouldmakebettersense.
SUPPORT

Amendment#4DefinePublicPropertyasitRelatestoLocalPropertyTaxes

Thisamendmentdealswithwhatappearstobeanextremelylimitedcircumstance.Local
governmentsareallowedtocollecttaxesonvariouskindsofpropertywithintheirjurisdictions,but
theconstitutionspecificallyexemptspublicpropertyusedforpublicpurposesfromthattaxation.

Thats,ofcourse,sothatthestateanditsparishesandmunicipalitiesarentspendingalotoftheir
timeandresourcespayingandcollectingtaxestoandfromeachother.

ButwhoknewthatthecityofMemphiswasstoringnaturalgasapublicpropertyinafacilityin
WestCarrollParishandthattheparishhadleviedataxonit?Thematterwenttocourtandsofar
twojudgmentshaveupheldtheviewthatwhentheconstitutionexemptspublicpropertyfrom
taxation,itmeanspublicproperty.Theresultisthat,fornow,thecityofMemphisdoesnotowethe
parishthe$400,000itwasassessed.Thisamendmentwouldreversethatsituationtosaythatlandor
propertyownedbyanotherstateoracityinanotherstateisnotexemptfromlocalpropertytaxes.

Comment:Thisamendmentarrivestovotersfromthecourtsanditshouldstaywiththecourts.We
dontknowpreciselywhatthearchitectsofourconstitutionmeantwhentheytalkedabout
exemptingpublicpropertyfromtaxation,buttheyclearlydiditandthatswhywehavecourtsto
decidematterslikethese.

Onepointthathasbeenmadebyothersisworthmentioning.Ifthisamendmentpasses,otherstates
andtheirpoliticalsubdivisionswouldbesubjecttolocalpropertytaxes.Buttheamendmentissilent
onwhetherthepublicpropertyofforeigncountriesistaxable.Basedonthecourtrulings,itwould
appearthatforeignpropertywouldbeexemptfromtaxesandonewondersifthatisactuallythe
statespublicpolicyintentwiththisamendment.

Bethatasitmay,anextra$400,000wouldclearlymeanalottoaplacelikeWestCarrollParish,but
thatsnotreallytheissuehere.Itsnotgoodpolicytochangetheconstitutionforisolatedsituations
orwhenacourtrulingresultsinadifferentoutcomethansomewouldlike.Thatsactuallyoneofthe
reasonswehavesomanyconstitutionalamendments.Iftheresalargerpolicyatplayhere,itsnot
apparentandthisparticularamendmentdoesntseemtoresolveallthepertinentquestionsthatthe
discussionofthisissuehasraised.OPPOSE