For Immediate Release – November 9, 1998
Contact: James C. Brandt, President & CEO
(504) 525-4152, ext. 12BGR Opposes City Property Service Charge, Calls Proposal Badly Deficient, Misleading
While acknowledging the City of New Orleans’ fiscal plight and pledging its full cooperation in the review of other options or "significant" revision of the present proposal, the Bureau of Governmental Research (BGR) announced today its opposition to the City’s property service charge on the ballot December 5.
BGR President and CEO Jim Brandt outlined the reasons for the organization’s opposition at a news conference today, at which he also released BGR’s report. BGR in its analysis concluded that "the current proposal has serious deficiencies and omissions, is misleading to the public, and—despite the unprecedented size of the proposed revenue increase—would do little to address the serious, fundamental fiscal plight of the City."
The report identifies a number of potential legal problems with the proposal, including the questionable constitutionality of the proposed transfer of funds from the City to the School Board and the vague and imprecise nature of the city council’s election resolution and ballot language.
BGR also cites a number of problems with the property service charge itself, including:
the large number of exemptions,
inequities in imposition of the charge,
difficulties in administration and collection of the charge, and
the non-deductibility for individuals on federal and state income tax returns.
With regard to the financial needs of the City, while the proposal amounts to the largest revenue measure ever put before New Orleans voters, it does little to address the fundamental gap between the needs and resources of the City. In fact, Brandt pointed out, the proposal creates new obligations without closing long-standing gaps between continuing obligations and actual resources.
The city’s Workforce 2000 proposal, but not the ballot language, allocates $22 million of the anticipated $47.7 million proceeds from the charge to pay raises for city employees. There is no adopted or agreed-upon plan for the use of that $22 million, the BGR analysis points out. The latest version of a pay plan developed but not adopted in 1998 would cost $26 million a year to implement, not $22 million.
BGR is concerned that increased employee pay is but one of many needs of the City. The City has already projected its operating deficit for 1999 at $31 million, at the current level of operations. This figure, however, does not include the additional $10-12 million BGR estimates will be needed to complete funding jail operations for 1998 and fund them for 1999.
With regard to the Orleans Parish School Board, Brandt pointed out that voter approval of the proposal would obligate the School Board to provide six percent across-the-board raises to employees, but the $13 million promised to the Board under the proposal would leave the Board nearly $4 million short of the funds needed for the raises.
Before the School Board withdrew its proposition for a property tax increase from the November 3 ballot, the BGR Board had already voted to continue its April opposition to across-the-board raises for all school employees. BGR has repeatedly insisted that "the fundamental element that should precede any and all requests for additional funding is a strategic plan that indicates clearly the priorities for new or additional funding, and the School Board still does not have one." BGR also opposes raises for school employees until the School Board makes good on a ten-year-old dedication to employee " productivity incentives."
The transfer of funds from the City to the School Board contemplated by the proposal may even be unconstitutional, Brandt said, despite an anticipated Cooperative Endeavor Agreement between the City and the School Board. If the transfer of funds is ruled unconstitutional, the BGR report suggests, the City could stand to receive all the proceeds of the service charge.
Aside from the larger problems of a lack of clear, adopted plans and priorities, the details and terms of the property service charge itself are so incomplete and imprecise the proposal needs significant development and revision, Brandt said. "This proposal, including the ballot language and the proposed ordinance, were so hastily drafted and approved that they leave numerous essential questions unanswered," Brandt declared. For example, "residential" and "commercial" are not defined. Should the terms be construed as they are in the zoning ordinance? Or in property tax law?
Or in the sanitation service charge ordinances? If a parcel is used for both residential and commercial purposes, which rate applies? Do both rates apply? Do the dollar caps on the charge apply per parcel or per owner? Is all property owned by a non-profit to be exempt from the property service charge, including land leased to a private entity for commercial purposes? Or only the property owned by a non-profit that is currently exempt from ad valorem taxes because of a charitable use?
BGR "firmly rejects the often-repeated notion that the City simply has no other options," Brandt reiterated from the report. Other options include:
elimination of the homestead exemption on municipal millage,
an increase in the city’s service charge for specific services,
improvement and significant revision of the property service charge proposal itself, and
further reductions in operating expenditures by the City.
BGR pledged "full cooperation" to the City and the School Board in examining these and any other options.
BGR is a private, nonpartisan, nonprofit citizen-supported research organization founded in 1932 and dedicated to informed public policy-making and the effective use of public resources in the New Orleans metropolitan area.
Additional information about the report or BGR may be obtained at 525-4152 or www.bgr.org.u
A copy of the report can be reached through this hyperlink
BGR’s Review and Analysis of The Real Property Service Charge Proposed by the City of New Orleans
BGR assumes no responsibility for content outside the domain bgr.org.