Louisiana Legislative Auditor
Daryl G. Purpera, CPA, CFE

November 17, 2017

Follow-up Report Suggests More Options to Change Tax Commission Procedures

A follow-up examination of the Louisiana Tax Commission’s appraisal process for public service companies offered some additional recommendations to those outlined in a previous report, the Legislative Auditor said in a report released today.

Auditors found that the Tax Commission could increase tax revenues by decreasing the capitalization rates it uses, which would have a similar effect to accounting for expected future income growth. Accounting for expected income growth was recommended in the previous report and is supported by national standards.

Decreasing the capitalization rate would increase the assessed value of a company, resulting in additional tax revenues for local governments. Auditors calculated that a decrease in capitalization rates between 1 and 5 percentage points could result in parishes receiving $37 million to $336 million in additional tax revenue annually.

In addition, auditors found that if the Tax Commission were to change how it apportions the assessed values of nuclear power plants by using the same formula that it generally uses for other public service companies’ properties, annual tax revenues could increase by $6.1 million in St. Charles and $6.6 million in West Feliciana, while other parishes’ annual revenues could see decreases ranging from $270,000 (Beauregard) to $2.3 million (East Baton Rouge).

In general, each parish receives a percentage of a public service company’s assessed value, and each parish’s percentage is based on the percentage of the company’s property in that parish, valued at historical cost. The Tax Commission apportions nuclear power plants through a separate calculation that is reduced each year to account for depreciation. This differs from the historical cost apportionment formula, which does not account for depreciation.

For more information contact:

Legislative Auditor
225.339.3800



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Office of the Louisiana Legislative Auditor | www.LLA.La.gov