It’s likely going to take legislation to find a new funding source for the state’s Uniform Local Sales Tax Board after the Louisiana Supreme Court ruled last week that the current funding model is unconstitutional.
“We don’t have a firm idea yet on how to do that,” the board’s executive director Roger Bergeron told Daily Report today.
More than likely, it will require legislation. The board was created through Act 274 in the 2017 legislative session and established a sole funding source: a small percentage of motor vehicle sales taxes.
According to the law, the board was set up to receive 0.2% of collections in Fiscal Year 2017-2018, then 0.25% in 2018-2019, and finally 0.3% from 2019-2020 onward. That percentage was on top of fees imposed by the Office of Motor Vehicles.
From September 2018 to August 2019, East Baton Rouge collected $14.8 million in vehicle sales taxes, according to data reported by the city-parish. Under the 0.2% kickback rule, the board would have kept roughly $30,000 of that.
The state Supreme Court ruled it unconstitutional, however, because the taxes were not authorized for that use by voters.
Despite the outcome, Bergeron says the board was “heartened” by the court’s statements that the function and purpose of the board are worthwhile and the costs were “deemed to be reasonable.”
The board will continue to operate in the meantime on reserve funds. According to the latest audit report, the board had a fund balance of $386,000 as of June 2018.
“We have mandates from the Legislature to do certain things, we can’t ignore that,” Bergeron says.
It’s unclear if the board will have to pay back the fees that have already been remitted from local hands. That’s something for their counsel to work out, Bergeron says. Payments have already stopped since February.
The matter is expected to be discussed at the board’s next regular meeting on Jan. 9.
