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LFT on Amendments: Yes on #3; No on #6

The Louisiana Federation of Teachers is urging members to support Constitutional Amendment #3, an important part of the state legislature’s effort to fix the budget, when they go to the polls on November 8.

The Federation recommends a vote against Amendment #6, which could lead to a reduction in the Minimum Foundation Program, which funnels state money to local school districts.

“Passage of Amendment #3 is one big piece of a puzzle that lawmakers tried to put together last spring,” said LFT Interim President Larry Carter. “It must pass in order for other reforms to go into effect.”

The amendment would change Louisiana’s constitution to eliminate the deductibility of federal income taxes paid in computing a corporation’s Louisiana’s corporate income tax, but its importance goes deeper than that, Carter said.

“The amendment is part of a larger agreement that will level our corporate tax structure,” Carter said. “It will give the business community the flat tax rate they want, and eliminate a tax loophole that has been costing the state hundreds of millions of dollars.”

Currently, Louisiana’s corporate tax rate varies from four to eight percent, depending on corporate income. That will be flattened at six percent according to a bill passed last spring, but only if Amendment #3 is approved by voters.

The flattened tax rate would increase state general fund revenues by about $30 million a year, according to projections from legislative fiscal office. Eliminating the deductibility of federal income taxes would add another $190 million in Fiscal Year 2017-18 and $200 million in FY 2018-19.

“These two issues are linked,” Carter said, “and the tax reform will not happen unless Amendment #3 passes. That is why LFT endorses the amendment and urges voters to support it.”

The LFT’s reason to oppose Amendment #6 is much easier to explain. It would make it easier for the legislature to cut funding for public education.

Currently, public education’s Minimum Foundation Program is protected by the Constitution and can only be reduced in the next fiscal year after a shortfall is predicted. This amendment would make it possible for the legislature to reduce the MFP by one percent at any time, including the current year, if the official revenue forecast is reduced by one percent.