How should Caldwell Parish divide its voter-dedicated industrial park and 911 property tax?

Plain-English summary

Caldwell Parish asked whether it had been distributing a voter-dedicated property tax to the wrong funds. The official opinion says yes: the parish had put $50,000 in its 911 Fund and the remainder in its Industrial Operations Fund, while the voter-approved proposition required a "$50,000 reserve in the Industrial Operations Fund with the remainder allocated to the 911 Fund."

The ballot approved in December 2020 renewed a 2.18-mill tax for 2021 through 2030, with that allocation. Under La. R.S. 39:704, proceeds of a special tax form a trust fund for the purposes for which voters approved it. The AG said Caldwell should immediately allocate receipts according to the ballot and use available records, which went back to 2004, to reconcile past distributions as far as possible.

The opinion also limits the remedy. If reconciliation shows insufficient money in the Industrial Operations Fund to account for past misallocations, the AG said the parish need not repay the 911 Fund with future collections; doing so would again allocate future proceeds contrary to the ballot. To use future collections to make up past errors, the parish would need a new voter proposition.

What this means for you

Caldwell Parish finance officials. The opinion calls for a $50,000 industrial reserve and directs the remaining proceeds to 911 once that reserve is funded. It says to reconcile earlier years using records available from 2004 onward where possible.

911 and industrial-park officials. The AG rejected continued allocation in the reverse order. It also rejected using future voter-dedicated collections to repay historical shortfalls without a new proposition.

Taxpayers. The opinion ties use of the proceeds to the purposes and split stated on the ballot, rather than to the parish's past accounting practice.

Common questions

Which fund gets the first $50,000 under the ballot?
The Industrial Operations Fund, as a reserve for industrial-park purposes. The remaining proceeds belong to the 911 Fund.

How should the parish address earlier allocations?
The AG said to reconcile accounts with available records as far as possible and to distribute future proceeds according to the proposition where a full correction is impractical.

Can the parish use future tax money to repay the 911 Fund for past mistakes?
The AG said no without a new voter proposition, because that would again divert future collections from the current ballot allocation.

Background and statutory framework

Voters first approved the tax for industrial-park purposes, rededicated it in 1996 to create an industrial reserve and fund 911 with the balance, then renewed it. The opinion quotes the 2020 proposition and applies La. R.S. 39:704's rule that special-tax proceeds must be used for the purposes for which they were levied.

Citations and references

Statute: La. R.S. 39:704.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/23-0081

Original opinion text

State of Louisiana
DEPARTMENT OF JUSTICE
CIVIL DIVISION
RO. BOX 94005
BATON ROUGE
70804-9005
JeffLandry
July 31 2023
,

Attorney General
OPINION 23-0081

     Ms. Dianne Childress                                         129 TAXATION      -   Levy & Assessment (ad va!orem taxes)

Secretary/Treasu rer
La. R.S. 39:704
CaIdwell Parish Police Jury
7E7
Discusses the proper atlocation of a special ad valorem tax
P 0 B ox i i I
. . ., collected in Caidwell Parish.
Columbia, Louisiana 71418

Dear Ms. Childress:

You have requested an opinion from this office on behalf of the Caldwell Parish Police Jury concerning the collection of ad valorem taxes. Specifically, you have asked whether Caldwell Parish (the “Parish”) has incorrectly allocated the avails of a certain ad valorem tax, and if so, what steps should the Parish take to remedy the situation.

In 1990, Caldwell Parish voters approved a 2 mil tax for a period of 10 years for the purpose of industrial operations, maintenance, and job inducement at the Caldwell Parish Industrial Park. The tax was rededicated in 1996 in order to create a reserve of $50,000 for the purpose of industrial operations, maintenance, and job inducement at the Caidwell Parish Industrial Park. All remaining tax proceeds were to be used for operating and maintaining the 91 1 emergency telephone system in the Parish.

Since 1996, parish voters have renewed the tax every 10 years. The most recent ballot language, as approved on December 5, 2020, states the following:

Shall the Parish of Caldwell, State of Louisiana (the “Parish”), continue to levy a two and eighteen hundredths (2.18) mills tax on all the property subject to taxation in the Parish (an estimated $140,610 reasonably expected at this time to be collected from the levy of the tax for an entire year), for a period of ten (10) years, beginning with the year 2021 and ending with the year 2030, for the purpose of (i) funding a reserve of $50,000 for industrial operations and maintenance and job inducement at the Caldwell Parish Industrial Park and (ii) the remainder of the proceeds of the Tax to be used for the purpose of improving, maintaining and operating the 911 emergency telephone system in the Parish, including the acquisition and maintenance of the necessary facilities and equipment the refor?1

You stated that since the 1996 rededication, the tax proceeds have been applied as follows: (1) $50,000 allocated to the Parish’s 911 Fund; and (2) the remainder allocated

1 See https://voterportal.sos.Ia.gov/graphical#!#TabFuII (last accessed January 18, 2023).

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OPINION 23-0081
Ms. Dianne Childress
Page 2

to the Parish’s Industrial Operations Fund. As a result, you believe the tax proceeds have been allocated incorrectly (i.e., $50,000 should have been allocated to the Industrial Operation’s Fund with the remainder of the proceeds allocated to the 91 1 Fund). You also indicated that there is a fund balance in the Industrial Operations Fund. Accordingly, you have asked how the Parish should resolve this situation.

The Louisiana Supreme Court has “consistently interpreted the constitution to prohibit the use of dedicated and special taxes for purposes other than those for which they were levied.”2 Furthermore, La. R.S. 39:704 requires that:

The proceeds of any special tax shall constitute a trust fund to be used exclusively for the objects and purposes for which the tax was levied. The records of the taxing authority shall clearly reflect the objects and purposes for which the proceeds of the tax are used.3

Simply put, the proceeds of the particular ad valorem tax at issue cannot be used contrary to what was approved by the voters. The Louisiana Supreme Court has made no exception to the general rule that tax proceeds must be used in accordance with the ballot language as presented to the voters.

By the plain language on the ballot as presented to the voters, the tax proceeds should have been allocated such that $50,000 went to fund the reserve in the Industrial Operations Fund and the remainder of the proceeds should have been allocated to the Parish’s 91 1 Fund. In other words, once the Industrial Operations Fund balance reaches
$50,000, the remainder should be allocated to the 91 1 Fund. It is clear that the Parish has allocated the tax proceeds incorrectly. As such, the Parish should immediately begin allocating tax proceeds per the ballot language (i.e., $50,000 reserve to the Industrial Operations Fund and the remainder to the 91 1 Fund).

Next, we address the issue of how to remedy the erroneous distributions. You indicate that the Parish’s tax records only go back to 2004; as such, it is impossible for the Parish to reconcile the accounts prior to 2004. Still, the Parish to the extent possible should use the records available from 2004 to today in order to reconcile the accounts and determine the proper allocation of taxes to each fund. To the degree this is impractical or impossible, the Parish should simply allocate any and all future tax proceeds in accordance with the proposition.

Upon reconciliation of accounts, in the event the fund balance in the Industrial Operations Fund is insufficient to account for the amount of taxes incorrectly allocated going back to 2004, the Parish need not attempt to “repay” the 911 Fund with any additional money from future tax collections. This “repaying” would require the Parish to allocate tax

2 W. Feliciana Par. Gov’t v. State, 2019-00878, (La. 10/11/19), 286 So.3d 987, 996; City of New Orleans v. Louisiana Assessors’ Ret. & Relief Fund, 2005-2548, (La. 10/1/07), 986 So.2d 1, on reh’g. (Jan. 7, 2008); Orleans Parish School Board v. City of New Orleans, 238 La. 738, 116 So.2d 505 (La.1 959).
La. R.S. 39:704.

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OPINION 23-008 1
Ms. Dianne Childress
Page 3

proceeds, once again, contrary to the ballot language. In the event, the Parish wishes to use future tax proceeds to account for prior years’ incorrect allocation, the Parish must submit a new proposition to the voters indicating such.

Considering the foregoing, it is the opinion of this office that the Parish has incorrectly allocated the proceeds of the 2 mil tax in Caldwell Parish, most recently renewed on December 5, 2020. The proper allocation of tax proceeds according to the ballot language is a $50,000 reserve in the Industrial Operations Fund with the remainder allocated to the 911 Fund. To the extent possible, the Parish should use its available records to correct the error as much as possible. To the degree this is impractical or impossible, the Parish should simply distribute any and all future tax proceeds in accordance with the proposition.

We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.

Best regards,

JEFF LAN DRY
ATTORNEY GENERAL

BY:___
Craig P. Cassagne,
Assistant Attorney General
JL/CPC