What are Some of the Arguments For and Against the Fee Proposals?
Drainage Fee Arguments For
- Flood damage should be reduced over 60 percent as a result of the planned improvements.
- Flood insurance rates should also be reduced in most areas of the City.
- The drainage fee would provide local matching funds ($110 million) in order to leverage
$330 million in federal funds to pay for the improvements.
- The user fee is a fairer method of raising drainage funds than a property tax because
most homeowners pay no property tax.
- Increased drainage capabilities would enhance property values and the City’s tax
base.
- New Orleans would continue to enjoy a reputation for better drainage than that found in
surrounding parishes.
Drainage Fee Arguments Against
- State law (R.S. 38:90.17) states that no drainage fee or service charge shall take
effect unless first approved by a majority of voters in a public referendum. Not
withstanding this state law, the Board has suggested that the City Council has the
authority under the City’s Home Rule Charter to approve the drainage fee, without a
vote of the public.
- Even with nearly $800 million in improvements to the City’s drainage system, the
City will still experience some flooding in major (100 year) storms The proposed drainage
fee is based on estimated runoff, with no “caps” for large tracts of land or
exemptions for low-income residents.
- The ordinance approving the drainage fee now requires residents to pay a “Rate
Review Fee” to question the accuracy or correctness of the proposed drainage fee.
This is an unfair burden to place on citizens or businesses.
- The calculations of the drainage fee are based on a 1985 survey of samples of property
within each classification rather than actual calculations of each piece of property.
- The drainage fee will be higher in New Orleans than in adjacent parishes.
Sewerage Fee Arguments For
- The sewerage rate increase will avert the Board’s default under the Consent Decree
signed with the Environmental Protection Agency. Noncompliance with the Consent Decree
could result in significant monetary fines, court ordered rate increases, and the loss of
substantial federal funds.
- Needed repairs will prevent raw sewerage from polluting Lake Pontchartrain and other
waterways in the City and bring the City into conformance will all Clean Water Act
requirements.
- A user fee is a fair, legally tested method of raising revenue and is not difficult to
collect or administer.
- There has been no increase in sewerage rates since 1986, while operating costs have
increased 50 percent since that time.
- With the additional revenue provided through a sewerage rate increase, the Board will
meet all debt service coverage requirements and avoid a default on outstanding bonds.
Sewerage Fee Arguments Against
- While increased sewerage fees may be necessary, the increase could be approved by a
separate ordinance each year instead of doing the three-step raises in one ordinance. This
would allow the Board and the City Council to carefully monitor the amount of increased
revenue necessary to meet the Consent Decree obligations.
- There is no relief provided for low-income customers who may not be able to afford the
higher rates.
- Sewerage fees in New Orleans will be higher than in adjacent parishes.
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