The 10.6-mill parish bus tax approved by voters in Baton Rouge and Baker last month qualifies for homestead exemption, contrary to CATS officials’ earlier claims that it was ineligible, according to an opinion issued Wednesday by Attorney General James “Buddy” Caldwell.
The homestead exemption shields homeowners from being taxed on the first $75,000 of their assessed property value.
The application of homestead exemption means property owners will be paying less on their property tax bills than was originally stated when the Capital Area Transit System was campaigning for the bus tax. It also means CATS will be shorted about $3 million in annual tax revenue for service improvements.
Caldwell issued the opinion Wednesday, in response to a query by state Rep. Alfred Williams, D-Baton Rouge. The homestead exemption does not apply to municipal taxes but Caldwell said in his opinion that the CATS tax does not fit the definition of a municipal tax.
“A ‘municipality’ means an incorporated city, town or village. Since CATS is not a city, town or village, it is the opinion of this office that any special ad valorem tax levied by it is subject to the homestead exemption,” Caldwell said.
The opinion is not legally binding, but parish Assessor Brian Wilson said he will abide by the opinion as property taxes are collected, unless the courts determine otherwise.
CATS board President Jared Loftus said he does not expect bus system officials to challenge the opinion.
Loftus also said the decision was beneficial to taxpayers and will not “affect our ability to bring a quality transit system to Baton Rouge.”
“Our riders depend on the homestead exemption, it’s beneficial for a lot of people in Baton Rouge,” Loftus said. “It’s important to remember that we did not seek to do away with the homestead exemption. That was how we understood, but now that we know otherwise there is no reason for us to fight that.”
CATS originally estimated it would receive about $17.2 million from tax revenue, without the homestead exemption, from property owners in Baker and Baton Rouge.
Voters in the city of Zachary rejected the city-wide proposal.
But Wilson said the newest revenue projections based on 2012 reassessed property values show CATS would have collected $19 million from the two cities without the exemption.
Now that the homestead exemption is in effect for the tax, CATS will receive about $16 million, Wilson said.
Loftus said the net result is that CATS will only be working with about $1 million less per year than what the agency originally projected.
“I don’t see this affecting our ability to bring transportation reform to Baton Rouge,” he said. “It may limit some service levels. But the routes we suggested, those can all still happen.”
CATS officials had said throughout their tax campaign that the property tax would not be eligible for homestead exemption because it only applies to homeowners within the city limits of Baton Rouge and Baker, and municipal taxes are not eligible for the homestead exemption.
Opponents of the tax have for months called into question the agency’s ability to levy a tax that is ineligible for the homestead exemption, since it is not a municipal agency.
“This is a victory for tax payers,” said Elizabeth Dent, co-founder of Taxbusters.us, a grassroots anti-tax group. “But there is still a concern out there that ... the CATS board did not do their homework like we’d expect them to do to foster more accountability for our tax dollars.”
She said Taxbusters and other frustrated residents are researching options for “legal recourse,” including the “feasibility of filing suit” to further dismantle the tax.
Loftus said CATS was advised by its board attorneys when determining whether the homestead exemption would apply.
Loftus said while CATS calls the boundaries of the election, it is ultimately up to the Assessor’s Office to determine whether the homestead tax exemption would apply. Loftus said he did not know if the assessor’s office was ever consulted before the tax election was called.
Wilson, the assessor, said he was never consulted.
Loftus said he thinks the CATS board did its due diligence in trying to resolve the issue before the election was announced. He noted that the tax would have been more palatable to voters if it had been presented as homestead exempt from the beginning.
“That was never a favorable position for us to take by claiming it wouldn’t apply,” he said.
Williams, who made the inquiry to the Attorney General jointly with CATS, said he’s glad that issue has finally been cleared up.
Williams, who is also an attorney, said he did not think the change should merit a legal challenge to the whole tax.
“I don’t foresee that being a problem at all,” Williams said. “The way it was written on the ballot was very clear. Folks voted based on the ballot language, and now we can move forward even though it’s with less money than folks thought was available.”
Voters will see the new tax on their bills this December. CATS officials campaigned for the tax to drastically revamp the parish bus system by expanding routes, adding buses and reducing wait times from an average of 75 to 15 minutes.