Panel weighs shifting ad valorem taxes on private rail cars away from East Baton Rouge

At a February meeting of the Joint Commission on the Equal Distribution of Certain Ad Valorem Taxes, members examined how ad valorem taxes on privately owned rail cars are currently allocated and discussed alternatives to the current default that assigns their assessed value to East Baton Rouge Parish.

The discussion matters because the method that allocates those values determines which parishes receive the tax revenue produced by private rail cars — a distribution that committee members said affects local budgets, emergency services and capital needs.

Michael Matherne, administrator for the Louisiana Tax Commission, told the committee the current statute asks two questions when a private car line files its returns: whether the company has a business presence in Louisiana and whether it has an agent of record in the state. "If they have no agent of record, if they have no business presence here, a home base or office or otherwise, the default parish is East Baton Rouge," Matherne said. He added that the tax commission follows statute and places the value on the parish tax roll selected under those rules.

Matherne described alternative allocation methods used by other states. "Some of our sister states allocate that value based on the railroad miles within those parishes," he said, noting other options include allocating by population or sending proceeds to a state general fund. He said the tax commission could implement an allocation by miles but that doing so would require modest software updates: "There may be a little cost involved to get some of our software updated and tweaked, but I think that is modest — a couple thousand dollars," he said.

Danny Ford, representing the Veil Association of Louisiana, told the panel that decisions about taxing rail equipment and how to spend the revenue are for the legislature. "Different states figure out how much they wanna tax on things as well as Louisiana, but that is up to you guys how to spend it," Ford said.

Committee members questioned legal and practical limits on redirecting revenue. Members raised concerns about whether the state could shift money away from the parish that is currently treated as holding the property without constitutional changes. A member noted that, under current practice, the East Baton Rouge Parish assessor lists the rail cars on that parish's tax roll and the East Baton Rouge sheriff generates and sends the bills.

Lawmakers discussed a range of policy options and constraints: (1) reallocating assessed value by miles of track within a parish; (2) allocating by population or some hybrid; (3) placing proceeds in a dedicated statutory fund to support parish capital needs; and (4) keeping current practice unless the constitution or statute is changed. One committee member suggested a statutory fund that local governments could access for capital projects, but staff cautioned that using those funds for state capital outlay would likely require a constitutional change.

Members gave practical examples to illustrate perceived unfairness under the current default allocation. One committee member described a rail spur at a rice mill in Jefferson Davis Parish and said parish residents receive no ad valorem revenue from the rail cars serving that facility under current law.

The commission did not take formal legislative action at the meeting. Chair members said the panel intends to meet one more time before the regular session to vote on a recommended course of action for legislation; the meeting record shows a motion to adjourn was made and the committee recessed.

Next steps recorded on the transcript: the commission plans a final meeting in the coming weeks to decide a legislative approach and, if members direct it, staff would prepare details to implement the chosen allocation method.