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City Hall faults itself on taxes

Mayoral aides talk to fairness panel

Thursday, February 24, 2011
By Michelle Krupa
The Times-Picayune

After nine months on the job, top officials in Mayor Mitch Landrieu’s administration told a mayoral commission reviewing tax policies that City Hall is a poor collector of sales and business taxes and fares only slightly better at raking in property taxes and sanitation fees.

Speaking to the Tax Fairness Commission, which is charged with recommending ways to equalize the citywide tax burden, Chief Financial Officer Norman Foster said the administration has hired more auditors and collection agents, but there’s more work to do.

“As a city, we do poorly in knowing who should be paying sales taxes,” he said, noting that officials must keep close tabs on businesses’ revenue stream, which is self-reported.

Officials also have prioritized settling the largest outstanding property tax debts and sanitation fees, Foster said.

Data provided by Foster show that about $46 million in property and sales taxes and sanitation fees from 2010 still haven’t been paid.

Though a large portion of the sum is owed to the city’s general fund, the revenue also is distributed among the School Board, the Sewerage & Water Board and other public entities.

The collection of trash fees, which residents pay as part of their S&WB bills, could prove more problematic this year because the City Council recently boosted monthly rates from $12 to $24 for households and from $20 to $40 for businesses, he said.

“We’re a little worried about 2011 because the council doubled the sanitation fee,” he said. The administration requested the increase.

The administration has launched an initiative, dubbed RevenueStat, that aims to compile up-to-the-minute data on city income streams and improve tax and fee collections. The strategy mirrors the Police Department’s weekly ComStat crime-tracking meetings and the administration’s biweekly BlightStat nuisance-abatement updates.

The Tax Fairness Commission also keyed in on the Industrial Development Board, a city-chartered public corporation run by mayoral and council appointees that can dramatically reduce the local tax burden on private construction projects it sponsors.

Janet Howard of the Bureau of Governmental Research, a local watchdog, offered a critical assessment of several agency policies, among them a lack of consistent criteria for qualifying projects and the fact that the board does not need the blessing of local taxing bodies before it absolves developers from local taxes.

Howard also noted that the IDB “doesn’t make decisions related to an overall economic development strategy.”

And she pointed out that IDB-subsidized businesses, such as market-rate rentals built on Housing Authority of New Orleans property as part of mixed-use developments, can divert customers from competitors that carry a full tax burden, sapping the city of taxes from those entities.

IDB officials defended their actions.

“The board looks at projects that can’t quite make it without some kind of assistance or … some other project that is of such benefit to the community that tax-exemption is needed,” IDB advisor Stanley McDaniel said. “Unfortunately, coming up with a criteria that works for everything is, in my mind, pretty much impossible.”

Chief Administrative Officer Andy Kopplin said the mayor has asked the IDB to coordinate its efforts with the city’s emerging economic development goals. He added that officials across city agencies must decide case by case which inducements, from property tax exemptions to sales-tax breaks to infrastructure improvements, are most appropriate.

“I think the question that’s raised fairly is: If we need to subsidize a particular project to get the benefit of the city of New Orleans, should we actually appropriate the money to do that, or should we use a tax vehicle to do that?” he said. “It’s deeply complicated. But we are competing with other parishes and we are competing with other states, so are going to try to retain the flexibility.”

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