In The News › BGR criticizes bill to allow Morial Convention Center to levy taxes in nearby area

BGR criticizes bill to allow Morial Convention Center to levy taxes in nearby area

By Jeff Adelson

The Advocate

May 11, 2016

A local nonpartisan watchdog group came out Wednesday against a bill in the Legislature that would give the Ernest N. Morial Convention Center authority to levy taxes within a special taxing district for new projects on the New Orleans riverfront.

The Bureau of Governmental Research said the measure, House Bill 1056 by Rep. Walt Leger, would exacerbate a fractured taxing system in New Orleans that already does too much to constrain how local officials can spend tax dollars.

In a report last year, BGR argued that too much public funding is dedicated by law to various specific purposes — especially tourism — leaving local officials unable to shift dollars toward other priorities if needed.

In the case of Leger’s bill, the money has not been earmarked for any one project. But BGR said the Convention Center is sitting on $222 million in reserves and continues to receive $60 million in citywide taxes each year, raising questions about the need for new funding sources.

BGR has consistently urged a strategic approach to public spending based on a comprehensive assessment and prioritization of the needs of the multiple governmental entities operating in New Orleans,” the group said in a statement. “This is because local taxing capacity is limited by statutory caps and taxpayers’ tolerance for more taxes. It should be used judiciously to help ensure the community’s most pressing needs are addressed.”

The bill, which was unanimously approved by the state House and is awaiting a committee hearing in the Senate, would allow the Convention Center to levy a 2 percent sales tax, a 2 percent hotel tax and a 5-mill property tax within a special district that includes the facility itself and vacant land nearby that it hopes to develop into a hotel, retail and residential complex.

The bill does not spell out when those taxes would lapse, meaning they could potentially be levied even after whatever projects they would fund are finished.

Because the district includes no residents, the taxes could be imposed by the Convention Center’s board — which is largely appointed by the governor — without a citywide vote.

In an email late Wednesday, Convention Center General Manager Bob Johnson defended the plan and argued it would bring in tax revenue for the city’s general fund.

“The (Convention Center) Authority joins BGR in recognizing that the city of New Orleans lacks funding for pressing needs,” Johnson said. “The authority’s $1 billion public-private partnership development under consideration will provide a permanent and growing source of revenue to help address those needs just as the Convention Center has (done) over its 31-year history. It is a return on investment that is obvious and quantifiable.”

While officials told BGR there is no specific plan for using the new revenue, the report notes that tourism leaders have said they hope to develop a large tract of vacant land upriver from the Convention Center into a hotel, residential units and retail spaces. The scheme is expected to cost more than $150 million in public money plus extensive private investment.

The Convention Center has been looking to establish new taxes for some time, with a mixed record of success. The city has supported those efforts in the past and does not oppose the current plan.

The center’s large surplus comes, in part, from a 1 percent citywide hotel tax and 0.25 percent food and beverage tax that were established in the early 2000s.

That money was originally intended to fund an upriver expansion of the center that was scuttled after Hurricane Katrina, but the taxes remain on the books.

“Once taxes are established, they tend to take on lives of their own and are not reconsidered as circumstances change,” BGR said in its statement. “The Convention Center taxes for the canceled project are a prime example of this problem.”

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