In The News › A $1 billion puzzler: Are New Orleans’ taxing priorities ripe for revamp?

A $1 billion puzzler: Are New Orleans’ taxing priorities ripe for revamp?

By Richard Rainey

NOLA.com | The Times-Picayune

November 10, 2015

The expansion of the Ernest N. Morial Convention Center was supposed to be a toast of New Orleans’ self-promotion, replete with an elegant 60,000 square-foot ballroom overlooking the mighty Mississippi River that would call to high-rolling conventioneers the nation over.

Blame Hurricane Katrina, a faltering economy or legal wrangling among competing contractors, but the center’s board shelved that so-called Phase IV project in August 2007.

What it didn’t do, however, was stop collecting a state-imposed 1-cent hotel tax and a quarter-cent food and beverage tax to finance it. Over the years, that account quietly ballooned to $198.2 million dedicated to a ghost of a project.

In a new report, the watchdog Bureau of Governmental Research used the stalled convention center expansion, along with several examples, to call for a full-scale appraisal of just where every tax dollar in New Orleans ends up and a setting of new priorities in a city of fatted calves and long-neglected corners.

“Given all of the pressing needs and the limited public funds to satisfy those needs, New Orleans cannot afford to continue down this path,” the BGR report stated.

It’s an argument made especially salient as Mayor Mitch Landrieu’s administration struggles under the weight of pricey federal reform measures and large financial judgments against the city.

BGR estimates more than $1 billion in taxes will be collected this year in New Orleans. City Hall and the Orleans Parish School Board will receive the lion’s share. Education policies get slightly less than a quarter of the total. Public safety follows right behind as the city’s second-highest financed priority.

But it is in the smaller pots that BGR highlighted some head-scratching rankings. For example, 14 percent of taxes are dedicated to tourism, conventions and sports, but only 3.1 percent goes toward answering arguably the most pervasive complaint among residents: pockmarked streets and broken lights.

BGR attributed New Orleans’ convoluted tax policy to its “ad hoc” evolution over the past 50 years. A priority arose, and a tax was levied without consideration for the tax code as a whole. Under that practice, tax revenues have nearly tripled in that time and more than 60 entities receive some portion of that.

“Yet the chronic underfunding of basic city services and infrastructure persists,” the report stated.

BGR singled out several tax policies that it said were not agreed to by voters. That includes the hotel tax and food and beverage tax for the convention center as well as a 1.75 percent self-assessment by the Convention & Visitors Bureau on its member hotels “that BGR considers to be the equivalent of a tax.” That assessment has been spent on tourism efforts and downtown public safety and repairs in the French Quarter.

BGR acknowledged the report is not a comprehensive assessment of New Orleans’ tax landscape. It doesn’t delve into every nook and cranny of public spending. But it serves to put in stark relief a few past decisions that could be ready for revisiting.

“It is time to review current taxes in New Orleans and identify those that are ripe for rededication to basic municipal needs,” the BGR report stated.

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